SEBI notifies SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2009

SEBI has notified the SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2009. The provisions of these amendment regulations came to force on November 6, 2009. This gives effect to the decisions taken by the SEBI Board on September 22, 2009 (covered in this blog here). The major changes brought about by these amendment regulations are the following.

ADR and GDR under the purview of takeover regulations
SEBI has amended regulation 3(2) of the Takeover regulations in relation to the acquisition of Global Depository Receipts (GDR) or American Depository Receipts (ADR). Now acquisition of GDRs and ADRs would come under the purview of takeover code if the holder: -

• Become entitled to exercise voting rights, in any manner whatsoever, on the underlying shares; or
• Exchange such depository receipts with the underlying shares carrying voting rights.

Clarity in ‘creeping acquisition’ provision
SEBI has amended regulation 11 of takeover code by inserting the following lines ‘with post acquisition shareholding or voting rights not exceeding fifty five per cent’ and the amended regulation reads as follows: -

“11. (1) No acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, 15 per cent or more but less than fifty five per cent (55%) of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him to exercise more than 5% of the voting rights, with post acquisition shareholding or voting rights not exceeding fifty five per cent in any financial year ending on 31st March unless such acquirer makes a public announcement to acquire shares in accordance with the regulations”. It means that an eligible acquirer can acquire upto 5% in any financial year without making a public announcement, provided the post acquisition shareholding or voting rights does not exceed 55% in any financial year ending on 31st March.

A copy of the gazette notification is available here.