Anchor investors facility extended to issue of IDRs, ADR/GDR to trigger open offer in specified cases

SEBI vide its Press Release PR No.300/2009 has announced the decisions taken by the SEBI Board on September 22, 2009.

• Facility of anchor investors extended to issue of Indian Depository Receipts (IDRs): - SEBI decided to extend the facility of anchor investors to issue of IDRs on similar terms as applicable to public issues made by domestic companies. It also decided that at least 30% of issue size of the IDRs be reserved for allocation to retail individual investors, who may otherwise be crowded out.
• ADR & GDR under the purview of Takeover Code: - In cases where ADR/ GDR holders are entitled to exercise voting rights on the shares underlying GDRs / ADRs by virtue of clauses in the depositary agreement or otherwise, open offer obligations shall be triggered upon crossing the threshold limits set out under Chapter III of the Regulations. Earlier Takeover Code was not applicable to the acquisition of GDR or ADR so long as they are not converted into shares carrying voting rights (Regulation 3 (2).
• Disclosure of sale/ purchase by acquirer under Regulation 7 (1A) of Takeover Code: - SEBI has decided that any acquirer holding shares / voting rights between 15-75% should disclose purchase or sale aggregating two percent or more of the share capital. Earlier the regulation required disclosures on (+ /-) 2% acquisition / divestment by the acquirers holding shares / voting rights between 15-55%.
• Amendment to Regulation 11(1) of Takeover Code to allow creeping acquisition beyond 55%: - Regulation 11(1) would be amended to clarify that under Regulation 11 (1), the creeping acquisition of 5% would be available subject to the condition that post-acquisition, the shareholding / voting rights of the acquirer together with persons acting in concert with him, shall not increase beyond 55%. However, such acquisition up to 55% under Regulation 11(1) shall not be a bar on further acquisition up to 5% as envisaged under the second proviso to Regulation 11 (2). This means that acquirer can acquire without making a public announcement additional shares or voting rights entitling him upto 5% voting rights in the target company subject to the conditions mentioned in Regulation 11 (2) (i) & (ii).
• Compliance with applicable Accounting Standards: - SEBI decided that a listed company undergoing corporate restructuring under a scheme of arrangement should submit an auditors’ certificate to the stock exchange to the effect that the accounting treatment followed in respect of financials contained in the scheme is in compliance with all the applicable accounting standards. This requirement will be prescribed through amendments to listing agreement. In case of an unlisted company undergoing similar corporate restructuring and proposing to make an IPO should make disclosures in the DRHP in terms of AS 14. This will be mandated through the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

A copy of the Press Release is available here.