SEBI issue clarifications on creeping acquisition

SEBI vide its Circular CFD/DCR/TO/Cir-01/2009/06/08 dated August 6, 2009 has issued clarifications regarding the applicability of the Regulation 11 (2) of the Takeover Code. In October 2008, this regulation was amended to increase the creeping acquisition limit from 55% to 75%. Now SEBI has issued clarifications with regard to this. The clarifications are as follows: -

• The acquisition, within the limit of five per cent (5%) under the second proviso to sub-regulation (2) of regulation 11, may be made by an acquirer who, together with persons acting in concert with him, holds fifty five percent (55 %) or more but less than seventy five per cent (75 %) of the shares or voting rights in the target company ;
• The acquirer together with persons acting in concert with him, holding shares or voting rights as specified at (a) above, may acquire additional shares or voting rights upto a maximum of five per cent (5 %) voting rights in the target company in one or more tranches, without any restriction on the time-frame within which the same can be acquired;
• The aforesaid acquisition of five per cent (5 %) shall be calculated by aggregating all purchases, without netting the sales.
• Consequent to such acquisition, the percentage of shareholding / voting rights of the acquirer, together with persons acting in concert with him, in the target company, shall not increase beyond seventy five per cent (75 %). This limit is applicable irrespective of the level of minimum public shareholding required to be maintained by the target company in terms of clause 40A of the Listing Agreement.

A copy of the Circular is available here.