Professional Documents
Culture Documents
G Aanatharaman SEBI Takeover Presentation
G Aanatharaman SEBI Takeover Presentation
G Aanatharaman SEBI Takeover Presentation
G. Anantharaman
Director Tata Realty and Infrastructure Limited
April 2010
An Overview
Shares may be acquired either by way of block deal with select shareholders, tender offer (to all the shareholders), or through open market purchases. Acquisition of a stake in a listed Indian company requires compliance with key regulations. - Securities and Exchange Board of India (SAST) Regulations 1997 (the Takeover Code) of Securities and Exchange Board of India (SEBI) The Takeover Code stipulates requirement, depending upon the nature and quantum of the acquisition, of making an offer to purchase shares from the public shareholders, including - The minimum number of shares for which the offer is to be made - The minimum price at which the shares must be acquired
An Overview
In the event the public shareholding in the Indian Company falls below the specified 10%, then The acquirer has to make an offer to buy out the outstanding shares remaining with the shareholders, resulting in de-listing of the Company, or for delisting the company process prescribed under delisting guidelines needs to be followed The acquirer has to divest, through an offer for sale or by a fresh issue of capital to the public, to keep the public holding at the prescribed levels and prevent a delisting FIPB and/or RBI approval may be required in specific cases.
Offer under Regulation 11 (2) needs to be made if the Acquirer along with PAC want to exceed 55% shareholding in the Target Company
This regulation is not applicable if the change in control takes place pursuant to a special resolution passed by the shareholders in a general meeting Case (1) S.C. in the case of Swedish Match AB Vs SEBI (2004) said Regulations 10, 11 and 12 ex facie operate in 3 different fields. They seek to control creeping acquisition which may lead to
90-Day Window
Date of passing a firm and final resolution by Board/constituted Committee (Trigger Date) Draft copy of Public Announcement submitted to SEBI, Stock Exchanges & Target Public announcement to be published in leading newspapers :
In 4 working dates from the Trigger Date
Draft Letter of Offer and due diligence cert. filed with SEBI. Stock Exchange & Target
Not later than 14 days from the Public Announcement
90-Day Window
Final Printed Letter of Offer to SEBI Letter of Offer to reach Shareholders
Letter of Offer to reach shareholders within 45 days of Public Announcement
Regulatory proceedings are quasijudicial, based on preponderance of probabilities no mensrea (Sri Ram Mutual Fund - Supreme Court)
Takeover Regulations
Principle Kishore Rajaram Chhabria v. The Chairman SEBI MANU/SB/0105/2003, it was elucidated that the purpose of the takeover regulations is remedial and regulatory. Its purpose is three-fold (i) to ensure that the incumbent management of the target company is aware of the substantial acquisition, (ii) to ensure that in the process of substantial acquisition, the securities market is not distorted or manipulated and, (iii) to ensure that the small investors are offered a choice viz, to either off-load their shares at a price generally higher than the prevailing market price or to continue as shareholders under the new dispensation.
However the limit under Regulation 11 would not apply to the acquisition of additional shares consequent to undersubscription, so long as the same has been mentioned in the Rights Letter of offer and the acquirer is in control of the company. If the acquisition results in any change of control of management, the exemption will not
Thank-you