takeover code[1]

8/8/2019 Takeover Code[1]

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INDIAN

TAKEOVERS


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Meaning Of Acqusition:

When an acquirer takes over thecontrol of the target company, it

is termed as takeover. When an

acquirer acquires substantial quantityof shares or voting rights of the Target

Company, it results into substantial

acquisition of shares.


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Types ofTakeover


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REGULATION 6REGULATION 6y It states that any person holding at the time

of commencement 5% or more of the

Shareholding must intimate to the Company

within 2 Months of date of notification andthe Company must intimate such holding to

stock exchange where the Companies

shares are listed within 3 months of the date

of notification. This is also applicable on the

Promoters of the Company.


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Regulation 7Regulation 7y Any Acquirer who acquires shares or the Voting rights which wouldentitle him to More than 5% or 10% or 15% or 54% or 74% mustdisclose within four days to the Company and Stock Exchangewhere shares are listed. The four days will be from 1) Date ofreceipt of Intimation 2) The acquisition of shares as the case maybe.

y Where the Acquirer has acquired the Shares together with personsacting in concert shall disclose purchase or sale aggregating to 2%or more of the share capital shall within four days disclose toCompany and stock exchange.

y The stock exchange must display information received on tradingscreen , the notice board and at website with 7 days of receipt of

Informationy The Company whose share have been acquired in manner stated

above must intimate such information to Stock exchange within7days of Receipt of information.


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Regulation 8 For continualRegulation 8 For continual

disclosure:disclosure:y Every person who holds more than 15% shares or

voting rights in any company shall within 21days fromthe end of Year (31st March.) must within 21 days

discloses to the Company about such holding. Thepromoter is required to disclose not only at the endof financial year but also the record date for purposeof declaration of Dividend.

y Every Company whose shares are listed on the stockexchange shall with in 30 days from the end offinancial year or from the Record date for dividendmust intimate such holding of shares to stockexchange.


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Regulation 9: Power to call forRegulation 9: Power to call for

informationinformation

y The stock exchange and the Company

shall submit information relating to

Regulation 6,7 and 8 to SEBI as and when

required by the Board


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Regulation 10: Acquisition of 10% orRegulation 10: Acquisition of 10% or

more shares by the Acquirermore shares by the Acquirer

y No acquirer Shall acquire which whenacquire in single or in persons acting inconcert with him entitle such acquirer toexercise 10% or more of the Voting rights ina company unless acquirer makes a publicannouncement. This is not required wheresuch acquisition is on a right share basis andsuch acquisition does not result in holdingmore than 55% of the voting rights


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Regulation 11 Consolidation ofRegulation 11 Consolidation of

SharesSharesy No acquirer shall acquire additional shares entitling him to

exercise more than 10% voting rights along with the votingrights he already has in any financial year unless publicannouncement is made for such acqusition

y No acquirer who holds 55% or more but less than 75% shallacquire either by himself or through the persons acting inconcert unless public announcement for same has beenmade.

y Where the case involved is of disinvestment of a publicsector undertaking an acquirer who together with persons

acting in concert with him has made a public announcementshall not be required to make further announcement forfurther acquisition of shares


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Regulation 12 Acquisition ofRegulation 12 Acquisition of

Control over the CompanyControl over the Company

y Control on target company cannot

cannot be acquired unless publicannouncement for same has been made.


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Regulation 13 : Appointment ofRegulation 13 : Appointment of

Merchant BankerMerchant Bankery Before making public announcement for

acquiring shares under regulation 10,11

and 12 an acquirer must appointMerchant Banker holding a certificate of

registration granted by Board and

merchant banker must not be associatedwith acquirer or group of acquirer


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Regulation 14: Timing of PublicRegulation 14: Timing of Public

Announcement of OfferAnnouncement of Offery The Public announcement shall be made

by the merchant banker within four

working days of entering into agreementfor acquisition of shares exceeding the

prescribed limits.


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Regulation 15: Public announcementRegulation 15: Public announcement

of offerof offery The public announcement under reg 10,11 and 12

must be made in all editions one English nationaldaily, one Hindi national daily and regionallanguage where the registered office of the targetcompany is located and at the place where theshares are frequently traded.

y The copy of same must be submitted to Boardthrough the merchant banker

y

Sent to all stock exchange where the shares ofthe companies are listed

y Sent to target company at its registered office


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Regulation 16 Contents of publicRegulation 16 Contents of public

announcement of offerannouncement of offer Paid up share capital of the target company, number of fully paid up and

partly paid up shares

Percentage of shares proposed to be acquired

Minimum offer price for each share

Identity of persons having control over such company Existing shareholding of acquirer

Existing shareholding of merchant banker in target company

Highest and average price paid by acquirer or persons acting in concertduring 12 months preceding to date of public announcement

Object and purpose of acquisition

Specified date as mentioned in Regulation 19 Date by which the individual letters of offer would be posted to each of

the shareholder

Date of opening and closure of offer

Date by which the payment of consideration would be made for share


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Regulation 17: Brochures,Regulation 17: Brochures,

advertising materialadvertising materialy The public announcement must not

contain any misleading information


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Regulation 18: Submission of letterRegulation 18: Submission of letter

of offer to the Boardof offer to the Boardy Within 14 days from the date of public

announcement acquirer shall through the

merchant banker file with the Board draftof letter of offer which must be submittedto shareholders within 21days from thedate of its submission to Board

y Fees to be paid along with submission toBoard depending on the issue size


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Regulation 19: Specified dateRegulation 19: Specified date

y The public announcement shall specify the

date for determining the names of

shareholders to whom the letter of offer

should be sent. The specified date cannotbe later than 30th day from the date of

public announcement


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Regulation 20: Offer PriceRegulation 20: Offer Pricey Where the shares of the Company are frequently traded: The minimum offerprice will be the highest of the following: The negotiated price as per the agreement

The highest of the price paid by the acquirer or persons acting in concert with him forany acquisition including by way of allotment or right issue during the 26 weeks periodprior to date of public announcement

The price paid by the acquirer under the preferential allotment to him or the person

acting in concert at any time during the 12 months period up to the date of closure ofoffer

The average of the weekly high and low of the closing prices of the shares of the targetcompany as quoted on the stock exchange during the 26 weeks preceding to the date ofpublic announcement.

When the shares of the company are not frequently traded: The minimum offerprice will be highest of the following:

The first three points will be same as if the shares are frequently traded.

The fourth point will be : price determined taking into consideration the factors like: Netprofit of the Company, Earning per share , book value of shares of the target company.


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Regulation 21: Minimum number ofRegulation 21: Minimum number of

shares acquiredshares acquiredy The public offer made by the acquirer to

the shareholders of the target company

shall be for minimum 20% of the votingcapital of the Company


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Regulation 22,23 and 24Regulation 22,23 and 24y These three regulations deals with:

Obligation of Acquirer (22)

Obligation of Board of Directors of thetarget company.(23)

Obligation of Merchant Banker(24)


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Regulation 25: Competitive BidRegulation 25: Competitive Bidy Any person, other than the acquirer who has

made the first public announcement , canmake a public announcement within 21 days

from the date of first public announcement.y Any competitive offer shall be for such

number of shares which when takentogether with the shares held by him alongwith person acting in concert shall be at

least equal to or more than holding of firstbidder.


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Regulation 26: Revision of offerRegulation 26: Revision of offery The acquirer can at any time up to 7

working days prior to date of closure of

offer. The revisions can be in respect of

following:

Changes in original public announcement in

all newspapers where the original public

announcement was made Increasing the value of Escrow account


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Regulation 27: Withdrawal of offerRegulation 27: Withdrawal of offery No public offer can be withdrawn except under

the following circumstances:

The statutory approval(s) required have been

refused The sole acquirer being a natural person has died

Withdrawal must be subject to:

Publish about the withdrawal in the newspapersin which the offer for public announcement was

made Intimate to stock exchange, Board and the target

company about such withdrawal


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Regulation 29: Payment ofRegulation 29: Payment of

considerationconsideration

y Amount of such sum payable must be

deposited within 7 days from the closure

of offer with a Banker to an issue

registered with the Board together with

90% of the amount lying in escrow

account


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TULSI DARYANANI

takeover code[1]

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