SEBI has today notified the new Takeover Code “SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011”. The regulations shall come into force on the 30th day from the date of the notification i.e. from October 22, 2011.
A copy of the new Takeover Code is available here.
Showing posts with label Takeover Code. Show all posts
Showing posts with label Takeover Code. Show all posts
Friday, September 23, 2011
Tuesday, April 26, 2011
Repeated buy-back offers not to be encouraged: SEBI
SEBI has in its recent order, allowing the Deccan Chronicle Holdings Limited (“Deccan Chronicle”) to buy-back 3.45 crore shares, stated that “repeated buy-back offers by a company is not something that SEBI, as a regulator, would like to encourage, given the fact that it could be misused by entities to consolidate their holding at the expense of the company”. This was the second time in the last two years that Deccan Chronicle had sought the permission of SEBI for exemption from the requirements of Takeover Code to come out with an offer to buy-back its shares. In July 2009 SEBI had granted Deccan Chronicle exemption from the requirements under the Takeover Code for increasing its voting rights from 63% to 73.51% pursuant to buy-back offer proposed by the target company. Thereafter, the target company had made the buy-back offer during August, 2009, wherein 4.84% of the total voting capital of the target company was bought back. In the present case, the Promoters again sought exemption from the requirements under the Takeover Code for increasing their voting rights from 63.37% to 73.83% (assuming 100% response) pursuant to buy-back offer proposed by the target company. SEBI vide its order dated 15 April 2011 granted Deccan Chronicle Holdings exemption from the requirements under the Takeover Code for the second proposed buy back of shares. However SEBI directed Deccan Chronicle not to seek any further exemption pursuant to any further buy-back offers by the target company. SEBI also stated that repeated buyback offers could be misused by acquires to consolidate their holding at the expense of the company and this is not something that SEBI, as a regulator, would like to encourage.
Monday, July 19, 2010
Report of the Takeover Regulations Advisory Committee
The Takeover Regulations Advisory Committee (“Committee”) constituted under the chairmanship of Shri. C. Achuthan has submitted its report to SEBI. Some of the main recommendations of the Committee are summarized below.
1. The Committee has recommended an increase in the acquisition threshold for the initial trigger of an open offer from the current level of 15% to 25% of the voting capital of a listed company.
2. The Committee has emphasized clarity in the trigger of an open offer pursuant to an indirect acquisition of shares, voting rights in, or control over a target company. The ability to indirectly exercise voting rights beyond the trigger threshold limits in, or exercise control over a target company, would attract the obligation to make an open offer, regardless of whether such target company is a predominant part of the business or entity being acquired.
3. The Committee has recommended that an open offer ought to be for all the shares of the target company to ensure equality of opportunity and fair treatment of all shareholders, big and small. The exception to this rule is the size of an open offer where the same is voluntary in nature.
4. Recognizing the need to enable transparent consolidation by persons already holding in excess of 25%, the Committee has recommended voluntary offers of a minimum size of at least 10% and a maximum size of such number of shares as would not result in a breach of the maximum non-public shareholding permitted under the listing agreement.
5. The Committee noted that the 100% open offer requirement could result in an acquirer ending up holding beyond the maximum permissible non-public shareholding, which may require the acquirer to either delist or bring down his holding to meet the continuous listing requirements. The Committee has recommended that the acquirer may state upfront his intention to delist if his holding in the target company were to cross the delisting threshold pursuant to the open offer.
6. Exemptions from open offer obligations have been made precise, streamlined and provided with clear conditions on the basis of the specific charging provision from which exemptions would be available. Some of the areas where clarity has been brought in include schemes of arrangement, certain inter se transfers, corporate debt restructuring and rights issues.
7. The minimum price payable as the offer price continues to be regulated. The minimum offer price is classified between the price payable for direct acquisitions and indirect acquisitions. The major changes proposed are: (i) market price to be based on 12 weeks volume weighted average of market prices as against higher of weekly averages of market prices for 26 weeks or 2 weeks; (ii) a qualitative improvement and expansion in the look back provision; (iii) in the case of indirect acquisitions, ascription of value to the target company under certain circumstances.
8. The Committee has brought in clarity on valuation in case offer price is being paid through shares. To ensure that the shares given in consideration for the open offer are indeed liquid and an acceptable replacement for cash, eligibility conditions have been stipulated.
9. The Committee has recommended certain changes such as increasing the period for making a competing bid, prohibiting acquirers from being represented in the board of target company, and permitting any competing acquirer to negotiate and acquire the shares tendered to the other competing acquirer, at the same price that was offered by him to the public.
10. The Committee has recommended that the execution of the agreement that triggered the open offer obligation may be completed during the pendency of the open offer provided 100% of the consideration payable under the open offer is deposited in escrow. Currently, an agreement which triggers an open offer can be consummated only after completion of the offer formalities.
11. The current Regulations restrict the target company from undertaking certain transactions during the offer period. The Committee thought it fit to bring in materiality concept as also to enhance the scope of such restrictions to include transactions by subsidiaries since potentially material transactions can be undertaken at the level of any subsidiary of the target company without approval of shareholders of the target company.
12. Timelines of various activities in the open offer process have been rationalized to compress the open offer period.
A copy of the press release is available here.
A copy of the report is available here.
1. The Committee has recommended an increase in the acquisition threshold for the initial trigger of an open offer from the current level of 15% to 25% of the voting capital of a listed company.
2. The Committee has emphasized clarity in the trigger of an open offer pursuant to an indirect acquisition of shares, voting rights in, or control over a target company. The ability to indirectly exercise voting rights beyond the trigger threshold limits in, or exercise control over a target company, would attract the obligation to make an open offer, regardless of whether such target company is a predominant part of the business or entity being acquired.
3. The Committee has recommended that an open offer ought to be for all the shares of the target company to ensure equality of opportunity and fair treatment of all shareholders, big and small. The exception to this rule is the size of an open offer where the same is voluntary in nature.
4. Recognizing the need to enable transparent consolidation by persons already holding in excess of 25%, the Committee has recommended voluntary offers of a minimum size of at least 10% and a maximum size of such number of shares as would not result in a breach of the maximum non-public shareholding permitted under the listing agreement.
5. The Committee noted that the 100% open offer requirement could result in an acquirer ending up holding beyond the maximum permissible non-public shareholding, which may require the acquirer to either delist or bring down his holding to meet the continuous listing requirements. The Committee has recommended that the acquirer may state upfront his intention to delist if his holding in the target company were to cross the delisting threshold pursuant to the open offer.
6. Exemptions from open offer obligations have been made precise, streamlined and provided with clear conditions on the basis of the specific charging provision from which exemptions would be available. Some of the areas where clarity has been brought in include schemes of arrangement, certain inter se transfers, corporate debt restructuring and rights issues.
7. The minimum price payable as the offer price continues to be regulated. The minimum offer price is classified between the price payable for direct acquisitions and indirect acquisitions. The major changes proposed are: (i) market price to be based on 12 weeks volume weighted average of market prices as against higher of weekly averages of market prices for 26 weeks or 2 weeks; (ii) a qualitative improvement and expansion in the look back provision; (iii) in the case of indirect acquisitions, ascription of value to the target company under certain circumstances.
8. The Committee has brought in clarity on valuation in case offer price is being paid through shares. To ensure that the shares given in consideration for the open offer are indeed liquid and an acceptable replacement for cash, eligibility conditions have been stipulated.
9. The Committee has recommended certain changes such as increasing the period for making a competing bid, prohibiting acquirers from being represented in the board of target company, and permitting any competing acquirer to negotiate and acquire the shares tendered to the other competing acquirer, at the same price that was offered by him to the public.
10. The Committee has recommended that the execution of the agreement that triggered the open offer obligation may be completed during the pendency of the open offer provided 100% of the consideration payable under the open offer is deposited in escrow. Currently, an agreement which triggers an open offer can be consummated only after completion of the offer formalities.
11. The current Regulations restrict the target company from undertaking certain transactions during the offer period. The Committee thought it fit to bring in materiality concept as also to enhance the scope of such restrictions to include transactions by subsidiaries since potentially material transactions can be undertaken at the level of any subsidiary of the target company without approval of shareholders of the target company.
12. Timelines of various activities in the open offer process have been rationalized to compress the open offer period.
A copy of the press release is available here.
A copy of the report is available here.
Sunday, February 15, 2009
Sebi announces takeover norms for companies like Satyam
SEBI vide a notification dated 13th February, 2009 has amended the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and has made the following changes:
· SEBI has stated that Chapter III of the Takeover Code will be relaxed by the Board in certain cases where the following conditions are satisfied, on an application made by the target company. (1) The Central Government or State Government or any other regulatory authority has removed the board of directors of the target company and has appointed other persons as directors. (2) Such directors have devised a plan which provides for transparent, open, and competitive process for continued operation of the target company in the interests of all stakeholders in the target company and the conditions and requirements of the competitive process are reasonable and fair.
· SEBI has also stated that no public announcement for a competitive bid should be made after an acquirer has already made the public announcement pursuant to relaxation granted by the Board in terms of regulation 29A.
· SEBI has stated that Chapter III of the Takeover Code will be relaxed by the Board in certain cases where the following conditions are satisfied, on an application made by the target company. (1) The Central Government or State Government or any other regulatory authority has removed the board of directors of the target company and has appointed other persons as directors. (2) Such directors have devised a plan which provides for transparent, open, and competitive process for continued operation of the target company in the interests of all stakeholders in the target company and the conditions and requirements of the competitive process are reasonable and fair.
· SEBI has also stated that no public announcement for a competitive bid should be made after an acquirer has already made the public announcement pursuant to relaxation granted by the Board in terms of regulation 29A.
Sunday, February 1, 2009
SEBI unveils norms for disclosure of pledged shares
Following its decision at a board meeting held on January 21, SEBI, vide a notification dated 28th January, 2009, has come out with the norms for disclosure about pledged promoter shares. Certain amendments have been made to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
The promoter should within seven working days of commencement of this amendment, should disclose the details of shares of that company pledged by him, if any, to that company.
The promoter should within 7 working days from the date of creation of pledge on shares of that company held by him or from the date of invocation of pledge on shares of that company pledged by him, inform the details of such pledge of shares to that company.
Companies should disclose all the details pertaining to the promoters’ share pledge, if at the end of any quarter, the total number of such pledged shares exceeds 25,000 or one percentage of the total shareholding, whichever is lower.
The promoter should within seven working days of commencement of this amendment, should disclose the details of shares of that company pledged by him, if any, to that company.
The promoter should within 7 working days from the date of creation of pledge on shares of that company held by him or from the date of invocation of pledge on shares of that company pledged by him, inform the details of such pledge of shares to that company.
Companies should disclose all the details pertaining to the promoters’ share pledge, if at the end of any quarter, the total number of such pledged shares exceeds 25,000 or one percentage of the total shareholding, whichever is lower.
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