MERGER&

ACQUISITION

Nemil ShahRoll No.54, 3rd Year,BSLS, Faculty of Law,The M.S.University of Baroda.

Provisions relating to Merger & Amalgamation under SEBI

SEBI (Securities and Exchange Board of India)

has announced revised take over code as SEBI

(Substantial Acquisition of Shares and

Takeovers), Regulations, 1997.

Its objectives is to provide proper framework

within which substantial acquisitions and

takeovers can take place.

The provisions are mentioned in SEBI (Substantial

Acquisition of Shares and Takeover) Regulations Act,

1997.

They are:-

1. The aggregate number of shares held by any person

holding more than 5% shares or voting rights, shall be

disclosed to all the stock exchanges, where the shares of

the company are listed.

2. Any acquirer who acquires shares or voting rights more

than 5 % in company should - in pursuance of public issue

or by one or more transaction or any other manner and

shall disclose the aggregate of his holding in that company

within 4 working days of acquisition.

3. Person holding more than 10% shares or voting rights

shall within 21 days from end of the financial year,

disclose his holdings as on 31 march.

4. No acquirer shall agree to acquire shares or voting rights

which entitle him to exercise 10% or more of voting

rights, without making prior public announcement under

these regulations.

5. No acquirer, holding not less than 10% and more than

25%, shall acquire additional shares, entitling him to

exercise more than 2% voting rights without public

announcement.

6. The minimum offer shall be highest of negotiated price

under agreement or average of weekly high and low of

closing prices of the shares of target company.

7. The public offer shall be made to shareholders of target

company to acquire an aggregate minimum of 20% of

the voting capital of the company.

8. Within 14 days of public announcement of offer, the

acquirer must send copy of draft letter to target

company and the various stock exchanges.

9. Another offer can be made as a competitive bid,

within 21 days of the first public announcement, for

all or some of the shares of the target company.

10. With the approval of SEBI, the acquirer or acquirers

shall have the option to make an announcement

revising the offer or withdrawing.

11. Irrespective of whether or not there is competitive

bid, if public announcement of offer is made and

any upward revision in respect of price and number

of shares to be acquired, it should be disclosed in

the three working day prior to closer of offer.

12. No public offer can be withdrawn except withdrawal

upon competitive bid and minimum level of

acceptance did not receive, refused by statutory

approval, the sole acquirer being bachelor person has

died.

13. The acquirer shall deposit in an escrow account a

sum equivalent to at least 25% of the total

consideration under the offer up to 100 crores and

10% thereafter.

14. When the acquirer does not want to acquire a

minimum of 20%, 50% of the consideration is

deposited in escrow account.

15. In case of a substantial acquisition of shares in

financially weak company, the acquisition can be

done by outright purchase of shares or exchange of

shares or both.

16. Person acquiring shares from the promoters of the

persons in charge of the management of financially

weak company, shall make a public announcement of

his such intention.

17. Once the bid of the acquirer has been evaluated and

accepted by the lead institution, no person shall make

a competitive bid for shares of the financially weak

company.

THANK YOU ! ! !