takeover code - group no 9 final
TRANSCRIPT
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P R E S E N T E D B Y :S A Y L E E G A N D H I 1 0 1 4 7
S H R E N I K M E H T A 1 0 1 5 0
S N E H A P A I 1 0 1 5 5
S N E H A S H R I Y A N 1 0 1 5 6
S O N A L I R E L E 1 0 1 5 8
T I R A T H B H A T T 1 0 1 6 5
V A R U N D A V E 1 0 1 6 9
OVERVIEW OF SEBI ACT &SEBI TAKEOVER CODE
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CONTENTS
SEBI Act, 1992
Necessity For Take over Code
Take over Code for Investors
SEBI Take-over Regulations
Threshold Disclosure Requirements
International Application
Examples
Highlights of the New Amendments
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THE SECURITIES EXCHANGE BOARD OFINDIA ACT, 1992 (SEBI ACT, 1992)
SEBIs Mission:
To make India as one of the best securities market of the world
SEBI as one of the most respected regulator in the world
SEBI Act, 1992
An Act to provide for the establishment of a Board to protect the interests ofinvestors in securities
to promote the development of, and to regulate, the securities market
for matters connected therewith or incidental thereto
SEBI Act Amendments in 1995, 1999 & 2000
To meet the requirements of:
Changing needs of the securities market
Respond to the development in the securities market
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NECESSITY FOR TAKE-OVER CODE
Globalization opened the doors of Indian economy for the
overseas investors
Mergers and acquisitions were the best option
Thus, SEBI appointed a committee headed by P.N. Bhagwati
o To study the effect of takeovers and mergers on securities
market
o Suggest the provisions to regulate takeovers and mergers.
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TAKEOVER CODE FOR INVESTORS
The confidence of retail investors in the capital market is a crucial
factor for its development
Exit opportunity
Full and truthful disclosure of open offer
Ensure the sufficiency of financial resources for the payment of
acquisition price to the investors
The process shall be completed in a time bound manner
Disclosures shall be made of all material transactions at earliest
opportunity
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SEBI TAKEOVER REGULATIONS
Mergers are primarily supervised by the High Court(s) and the
Ministry of Company Affairs
The SEBI regulates takeovers of companies that have shares
listed on any stock exchange in India
The Takeover Code, which sets out procedures governing any
attempted takeover of a company that has its shares listed on one
or more recognized stock exchange(s) in India
Regulation 10, 11, and 12 of the Takeover Code deal with public
offers
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THRESHOLD DISCLOSURE REQURIEMENTS
Acquisition % DisclosureRequirement
Timeframe Target CompanyObligation
5% and more of sharevoting rights
Every stage acquirermust disclose hisholding to target
company and stockexchange
Within 2 days ofacquisition or receiptof intimation of
allotment of shares
Inform stockexchanges where theshares of target
company is listed
1.)where acquisition of5%, 10% or 14% or 54%or 74% of share voting
rights
Holding >15% but
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INTERNATIONALAPPLICATION
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India U.S U.K Japan
Regulator SEBI SEC FSA Japan fair tradecomm.
Threshold limit(initialacquisition)
25% Offers are onlyvoluntary
30% 1. acquisition ofmore than 10%of the target
shares,2. more than5% acquiredfrom the off-exchange(market) bid ora stand-off(cross-tradingon an after-hours)
Offer size Minimum 26 %
of the votingcapital of the
As much as 5%
called TenderOffers Less
Conditional on
holding morethan 50% of
Remaining
shares
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India U.S U.K Japan
Timing ofdisclosures to bemade
Event Based:Within 2 businessdays from the dateacquisition or receiptof intimation ofallotment oracquisition of shares,as the case may be.ContinualDisclosure: Within 15
business days fromthe end of financial
year
- - Within 30 days ofthe acquisition
Can shareholderswithdraw the
acceptancestendered?
No Yes, up to sevendays of the copies
of the offer are sent
Yes. Under certaincircumstances
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Competitive Bidsallowed
Yes - Yes Yes
Penalties Civil and Criminal
Liabilities
Civil penalties Reprimand, public
censure, etc
Civil as well as
Criminal Liabilities
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EXAMPLES
For instance, in the BSE 500 companies, in the case of 215 companies the
promoters own less than 50% stake making them good candidates for
takeovers. And out of these 215 companies, in 76 companies, at least single
(non-promoter) shareholder owns between 10% to 49.99%. Hence, in the
case of those 76 companies, the vulnerability of being taken over is quite
high, the report pointed out.
For example, in Moser Baer, the promoter holding is 16.3% while the
largest shareholder,Warburg Pincus, holds 13.1%. "In such cases, the
vulnerability of the company significantly goes up,"
http://timesofindia.indiatimes.com/topic/Warburg-Pincushttp://timesofindia.indiatimes.com/topic/Warburg-Pincushttp://timesofindia.indiatimes.com/topic/Warburg-Pincus -
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HIGHLIGHTS OF THE NEW SEBI TAKEOVERCODE
Increase in threshold limit
From15% to 25%
Increase in Offer Size
From 20% to 26%
Abolition of Non-compete fees
Acquisition from the other competing acquirer
A recommendation on the offer by the Board of Target Company
Recommendation has been made mandatory
Voluntary offers have been introduced subject to certain conditions
Existing definition of Control shall be retained as it is.
The Board did not accept the recommendation of TRAC to provide for delisting
pursuant to an offer and proportionate acceptance.
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THANK YOU