SUBSTANCIAL ACQUISATION OF SHARES AND

TURNOVERS
1. SHARE: A share represents a unit of equity ownership in a company. It is
a part or portion of a larger amount which is divided among a number of
people or to which number of people contribute. In other words, shares are a
unit of stock which entitles the owner to a proportion of assets and profit
own.

2. ACQUIRER: An acquirer is a registered company that purchases a portion

of or all the rights to another company. In other words, the acquiring
company takes over the management of another company by obtaining the
majority share. (51% of shares)

3. CONTROL: control shares or control stock gives control to the

stockholder where larger and important decisions are to be made.

4. TARGET COMPANY: a company that has been chosen as attractive for

takeover by a potential acquirer. In a target company, the transaction can
proceed only if the target firm’s management, shareholders, board of
directors, agrees to the takeover.

5. PAC: PAC refers to PERSONS ACTING IN A CONCERT. It includes

people to an agreement or an understanding (whether formal or informal)
cooperate to obtain control of a company and ensuring successful outcome of
the offer.

6. ASSOCIATE COMPANY: An Associate company is also known as

AFFILIATE COMPANY. It is a company in which a notable portion of
shares is held by the parent company ( portion size= 20-50%)

7. TAKEOVER: When an acquiring company takes control over a target

company. This process is called takeover. They are done by purchasing a
majority stake in the target firm.

8. SUBSTANTIAL ACQUISITION OF SHARES: When the acquirer

company acquires a substantial quantity of shares and voting rights of the
target company. SAS under the SEBI regulations 2011, was initiated as a

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protective measure to guide the acquisition decisions. It acts as a guardian
ensuring fairness and transparency in the market.

ELIGIBILTY

PAC should be 25% holdings ( performance)

Agreements should be made for 52 weeks.

CONDITIONS
Substantial takeover should not exceed the maximum permissible non public
share holding.( unlisted company)
This acquisition cannot be part ways, it should be a full-fledged buying.

9. OFFER PERIOD: An offer period will commence when the first

announcement is made of an offer. In an offer, the general rule is to specify
the tenure or the reasonable amount of time.

10. TENDER PERIOD: it refers to making an invitation to the new share

holders/ updating the existing shareholders on contract flexibility

11. Open offer: an open offer takes place when a company wishes to raise
their capital. An open offer allows the stakeholders to understand and
compare the prices in the current market.
In other words, an open offer is an offer made by a company to its
shareholders inviting them to buy new shares in the company.

12. CLOSED OFFER: A closed offer is also called a closed deal, it is a

situation where negotiations reach to an end and the agreement of the
prospect has been closed.

13. COMPULSORY OFFER: a compulsory offer is also called a mandatory

offer. It is an obligation imposed to follow and abide by laws and regulations,
the opportunities can be considered with distinct rights of the authority.

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14. VOTING RIGHTS: Voting rights is a special opportunity given to
shareholders to vote on corporate actions. The shareholders can vote on
concerns raised in the corporation and otherwise also vote for the new board
of directors, other members etc.

15. DIRECT ACQUISITION: it means acquiring or taking over another

company with more than 51% shares.

16. INDIRECT ACQUISITION: it is taking over or acquiring another

company by partly paying or on a credit basis.

17. VOLUNTARY OFFER: it is an offer where PAC does not incur an

obligation. In other words, a voluntary offer has takeovers without too many
obligations but with limited voting rights.

18. OFFER SIZE: It is also called as sample. It is the number of securities

offered by a company.

19. OFFER PRIZE: It is the price at which the trader can buy from a broker.
It represents the minimum price that a seller is willing to receive for the
security.

20. MODE OF PAYMENT: it means the method adopted by an investor to

transfer the contribution with receipt of funds. MOP in shares include
A. Cash payment
B. Telegraphic transfer
C. Money orders
D. Bank draft
E. Pay cards
F. E payment
G. Digital money
H. Block chain technology.

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21. CONDITIONAL OFFER: It is also called a contractual offer, here the SH
who chose to accept the offer will not receive any payment for their shares
until all the conditions of the offer are met. In conditional offer, the
circumstances are specified in codes. The procedure for conditional offer is
A. First notice of board meeting
B. Holdings of the board meeting (inputs)
C. Letter of offer
D. Subscription period/ acceptance period
E. Second board meeting
F. Allotment of shares
G. Issuance
A conditional offer includes the specific conditions required for the SH and
the company.

22. UNCONDITIONAL OFFER: It is an offer that is made without too many

conditions or obligations. This essentially means that the SH of the target
company has agreed to all the conditions mentioned.

23. COMPETING OFFER: The term “ COMPETING OFFER” means two or

more buyers are formally competing for the same property. It is also called as
COMPET TENDER OFFER. It refers to the offer given by any other person
after an offer has already been given to the acquirer.

24. COUNTER OFFER: It means a response is given to an offer that was

rejected. In other words, it is an original offer which is rejected and replaced
with another offer. It has three offers:
A. Accept the offer
B. Reject the offer
C. Counter

25. DPAC: Deemed Persons Acting in a Concert, here persons who are
deemed to be acting in a concert must together have some intention to acquire
shares of the company and where the objective of one person is at cross
purpose with another person but offer same category.

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26. PAC takeover code: it is a core concept under SEBI with a takeover code
which talks about the subject matter of various disputes arising during the
checking performance in the concert

27. Public announcement: it is a letter of offer, form of acceptance,

acknowledgement, it allows promoters to obtain full ownership of the
company. There can be some public issues which can be raised during the
public announcement.
1. IPO
2. FPO

28 . RIGHT ISSUES: A public announcement will have the minimum details

about the public offer, transactional obligations, acquirer, selling share
holders, offer price, offer size, and the mode of payment. The primary
purpose of public announcement is to support, improvise and provide
guidelines to the public with the objective of reaching out the right people for
the company.

29. ESCORW ACCOUNT: It is a deed, a bond, money, or a piece of property

held in trust by a third party to be returned over the guarantee only upon
fulfillment of a condition. In other words, it is a type of legal holding
account, temporary account for items which can't be released until 3
determined conditions are satisfied. There are 2 parties i.e., buyer & seller,
they make an agreement which outlines the terms & conditions of the
transactions. The third party is escrow agent ( escrow service provider).
In an escrow agreement the following details are recorded:
1. Identification of participants
2. Details of the promise to be fulfilled
3. Deposit amount in escrow.
4. Conditions to the release of the escrow funds
5. Obligation of the escrow agent.
6. Fees & expenses
7. Legal jurisdictions

The process of setting up an escrow account

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1. understand the purpose & benefits of escrow account
2. Choose an eligible and reputable escrow service provider
3. Agree on to the terms & conditions
4. Submit the necessary documentation.
5. Fund the escrow account
6. Monitor the progress of the transaction
7. Complete the transaction and release the funds.

How to open an escrow account in India?

1. Research & choose a bank, consider factors such as reputation, fees &
customer reviews.
2. contact the chosen bank (Reach out to the selected bank to enquire about
the procedure for opening an escrow account)
3. Prepare necessary documentation (collect the necessary information such
as ID, address verification & transaction specific)
4. Submit documentation to the bank (Deliver the compiled documentation
with complete & accurate information)
5. Discuss terms & conditions (understand the bank's negotiations,
withdrawal procedures, fees framework etc)
6. Deposit funds into escrow account (once the escrow account is established
successfully transfer the agreed funds
7. Monitor transactions &ensure compliance (Ensuring rigorous terms and
conditions)
8. Close the escrow account after completion (Close the escrow a/c after the
transaction is effective & all the requirements are satisfied)

30. OFFER OF COUNTER: An offer of counter is also known as counter

offer. It is the response given to an offer meaning that the original offer was
rejected and replaced with another one counter offer is an offer which
replaces the original offer.

Counter offer gives the original offerer 3 options:

1. Accept the offer
2. Reject the offer
3. make negotiations in the offer

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31. PUBLIC STATEMENTS: Public statements means any information in

any press release or announcement on behalf of the company whether
information is required to be made public by applicable laws & regulations.
In other words a public statement refers anything that can be accessed by any
person of group or in general population. It is also known as a public
declaration, proclamation or a formal announcement
The basic procedure of public statements are-
1. Management should get the approval
2. Preparing files for registration.
3. Getting approval from the SEC
4. SEC studies registration.
5. Waiting period
6. Filling the statements
7. Prices are set
8. Full fledged selling efforts.

32. DISCLOSURE: Disclosure in financial terms means action of making all

relevant information about a business available to the public in a timely
manner. In other words, disclosure is the process of making facts &
information known to the public. It is the act of making its customers, and
investors and any people involved in business with the company aware of the
minimum information
There are 3 types of disclosure
1. Intentional authorized disclosure
2. Unauthorized disclosure
3. Inadvertent disclosure (unintentional) Some of the mandatory disclosures
on the website of the company should include in
A. Companies ACT, 2013 and
B. SEBI regulations Act, 2015.

33. TRANSER OF SHARES: Transfer of shares is when the title of the

shares is transferred from one person to another. 2 parties are involved
transferor and transferee. The intentional transfer of shares from the
transferor to transferee is called transfer of shares

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34. INTER-SE-TRANSFER- An Inter-se transfer involves qualified parties

such as immediate relative identified promoters, companies & their
subsidiaries, PAC & shareholders taking part in PAC's inter se transfer.
Exemption under a scheme under SEBI's substantial acquisition and
Takeovers in the year 2011 Inter-se-transfer of shares takes place b/w person
who are Called promoters. The Inter-se- transfer of shares should subject to
unconditional offers.

GENERAL EXEMPTIONS APPLICABLE TO ITA (INITIAL

TRIGGER ACQUISITION) UNDER REGIME 3(1)
1. Inter-se-transfer of shares: In Inter-se-transfer of shares, the following
parties are included:
A. Immediate relative : includes a spouse of a person/ parents/
siblings/children of him. In other words, it takes place between relatives and
is defined under definition 2(1).
B. Promoters: Inter-se-transfer of shares takes places between persons who
are called promoters. A promoter here is a person who is directly/ indirectly
in control of the listed company. In other words, they are individuals or
entities that have been instrumental in the growth and success of the
company. They help with making major decisions and have significant
control over the company.
C. Company and its subsidiaries: the company should be an Indian company
or a foreign company. Here, the person has to hold 50% or more of equity
shares.
D. SH of the target company: Inter-se-transfer of shares takes place between
SH of the target company who have been PAC for a period of not less than 3
years.
2. Acquisition done by a person, within the course of their business: it occurs
when one company (acquirer) buys the most/all shares in another
company(target) to assume control of its assets and operations.
3. Acquisition at subsequent stages: this exemption covers those subsequent
stages of the acquisition, such as agreement of disinvestment, pre stage
(prior), midpoint stage and former stage.

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4. Acquisition pursuant to various schemes: these exemptions have certain
legislation and schemes of arrangement, namely
SIC (SICK INDUSTRIAL COMPANY) ACT 1985.
IBC( INSOLVENY AND BANKRUPCY CODE) 2016.
THE COMPANIES ACT, 2013 UNDER SEC 106(1)
THE COMPANIES ACT, 2013 UNDER SEC 10(1)(H)
STRATEGIC DEBT RECONSTRUCTING SCHEME 2016 UNDER
SECTION 10(1A)
DELISTING OF SHARES UNDER REGULATION 2009
SARFAESI ACT,2002 UNDER REGULATION 4 (5)( C ) (2)
SARFAESI( SECURITIZATION AND RECONSTRUCTION OF
FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTREST
ACT)2002.
This act applies to loans for loans above 100000 that are classified as NPA.
In this act, the notice must be in writing and addressed to the borrower,
guarantors, or any other person who has an interest in the secured asset.

SEBI POWER TO ISSUE DIRECTIONS:

Some important powers exercised by SEBI are:
1. Power of inspection
2. Power of court
3. Powers of legal authority
4. Powers in the interest of the securities market.
5. powers regarding protection of investor
6. Powers to issue direction ( Section 11(B))
7. Power of investigation (Section 11( C ))
8. Power to seize and desist proceedings (Section 11(D))
9. Registration of stock brokers, sub brokers, share transfers etc. (Section 12)
10. Prohibition of manipulative and deceptive devices, insider trading and
substantial acquisition of securities and control (Section 12(A))
11. Power to protect the interest of investors without any prejudice
12. Power to promote development of securities market in India.
13. Power to regulate all the transactions in the securities market in order to
improve the transparency
14. Power to safety of investments.

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15. Power to sound and conducive capital status
16. Power to promote investors' education and training of intermediaries
17. Power to prohibit unfair and fraudulent trade practices
18. Power to regulate working of venture capital funds and collective
investment schemes.

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