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Takeover

 

Team LawDocs

SEBI has time and again amended its takeover regulations, recently in Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2020, where certain provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 were amended. In 2020, various other developments have taken place which are discussed further.

Contents  hide 

1 Relaxations relating to procedural matters – Takeovers and Buy-back

1.1 (ii) of Buy-back Regulations subject to the following:-

2 SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) (SECOND AMENDMENT) REGULATIONS, 2020

3 Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020

4 References

5 Related

Relaxations relating to procedural matters – Takeovers and Buy-back

On May 14, SEBI issued a circular for relaxing certain procedures under takeovers and buy-back, in view of the pandemic. Following are its key points:

  1. Service of the letter of offer and/or tender form and other offer related material to shareholders may  be  undertaken  by  electronic  transmission  as  already  provided under  Regulation  18(2) of  the  Takeover  Regulation  and  Regulation  9

(ii)  of  Buy-back Regulations subject to the following:- 

  1. The acquirer / company shall publish the letter of offer and tender form on the websites  of the  company,  registrar,  stock  exchanges  and  the  manager(s)  to offer. 
    1. The  acquirer  /  company  along  with  lead  manager(s)  shall  undertake  all adequate steps to reach out to the/its shareholders through other means such as  ordinary  post  or  SMS  or audio-visual  advertisement  on  television  or  digital  advertisement, etc.
    2. Further, the Acquirer/ Company shall make an advertisement containing details regarding the dispatch of the letter of offer. Electronically and availability of such letter  of  offer  along  with  the  tender  form  on  the  website  of  the  company, registrar and manager. To the offer in the same newspapers in which. (i) Detailed pubic statement was published as per regulation 14(3). Of Takeover Regulation. Or (ii) public announcements was published as per regulation 7(i) of Buy-back regulation. 
    3. Further, the acquirer/ company may have the flexibility to publish the dispatch advertisement. In, additional newspapers, over and above those required under the respective regulations. 
  2. The   acquirer/   company   shall   make   use   of   advertisements   in   television channels, radio, internet   etc.   To   disseminate   information   relating   to   the tendering process. Such advertisements can be in the form of crawlers/ tickers as well.
    1. All the advertisement issued should also made available on the website of the company. Registrar, Managers to the offer, and Stock Exchanges.

2.  The   acquirer/   company   and   the manager to offer shall provide procedure for inspection of material documents electronically.

3.  As far as possible, attempts will made to adhere to the existing prescribe framework.

SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) (SECOND AMENDMENT) REGULATIONS, 2020

On June 22, SEBI issued the following Regulations to further amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011:

“I. In regulation 10, the following new sub regulation  shall be inserted. After sub regulation (2A) namely

(2B) Any acquisition of shares or voting rights or control of the target company  by  way  of  preferential  issue  in  compliance  with  regulation 164A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 shall be exempt from the  obligation  to  make  an  open  offer  under  sub-regulation  (1)  of regulation 3 and regulation

Explanation-The above exemption from open offer shall also apply to the target company. With infrequently traded shares which is compliant with the provisions of sub-regulations (2), (3), (4), (5),(6), (7) and (8) of regulation 164A of the Securities and Exchange Board of India (Issue of  Capital  and  Disclosure  Requirements)  Regulations,  2018.  The pricing of such infrequently traded shares shall be in terms of regulation 165 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.”[1]


Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020

On June 16, 2020 SEBI issue Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020. Where a new proviso in Regulation 3(2) added:

“Provided that the acquisition beyond five per cent. But upto ten per cent of the voting rights in the target company shall be permitted for the financial year 2020-21. Only in respect of acquisition by a promoter pursuant to preferential issue of equity shares by the target company.”[2]

References

[1] SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVER) (SECOND AMENDMENT) REGULATIONS, 2020

[2] Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020

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