Do you wish to takeover a listed company – Company Registration in Madurai
Do you wish to takeover a listed company
- If you are a listed company and the person taking over the company is already holding 25% of the voting rights in respect of shares to be acquired, and, the acquirer is desirous of acquiring further shares in respect of target listed company, he has to make the public announcement of a n open offer for acquiring further shares as per the Regulations. However, if the acquirer is desirous of acquiring not more than five percent additionally in the shares of the company in any financial year, in addition to the twenty five percent held by him, he can do so under the creeping acquisition route. Acquisition beyond the five percent and up to the maximum permissible non-public shareholding of seventy five percent will trigger of an open offer under the Regulations.
- The acquirer will not be entitled to acquire further shares in the target listed company exceeding the maximum permissible non-public holding of seventy five percent. Requirement of making an Open offer will not apply if allotment of shares is made pursuant to rights issue or under a buy back scheme, pursuant to any undertaking agreements to the underwriters in a public issue etc.,
Takeover regulations of SEBI will not apply inter-alia to acquisition of shares in the ordinary course of business, by:
- an underwriter registered with the Board by way of allotment pursuant to an undertaking agreement in terms of the Securities and Exchange Board of India (Issue of capital and Disclosure requirements) Regulations,2009.
- a stock broker registered with the Board on behalf of his client in exercise of lien over the shares purchased on behalf of the client under the bye-laws of the stock exchange where such stock broker is a member;
- a merchant banker registered with the Board or a nominated investor in the process of market making or subscription to the unsubscribed portion of issue in terms of Chapter 10 B of the Securities and Exchange Board of India;
- a merchant banker registered with the Board acting as a stabilizing agent or by the promoter or pre-issue shareholder in terms of Regulations 45 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
- By a registered market-maker of a stock exchange in respect of shares for which he is the market maker during the course of market making;
- A Scheduled Commercial Bank, acting as an escrow agent; and invocation of pledge by Scheduled Commercial Banks or Public Financial Institutions as a pledge.
- Takeover Regulations of SEBI will also not apply to acquisition of shares of an unlisted company or acquisition pursuant to a scheme of amalgamation sanctioned by the High court or amalgamation under the Sick Industrial listed Companies (Special Provisions) Act, 1985.
- Takeover Regulations will also not apply to acquisition of shares in terms of guidelines or regulations regarding delisting of securities specified or framed by the SEBI Board.
- Takeover Regulations of SEBI will apply if by virtue of acquisition or change of control of any unlisted company, whether in India or Aboard, the acquirer acquires shares or voting right or control over a listed company inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2015 further provide that in the event the acquirer makes a public announcement of an open offer for acquiring shares of a target listed company in terms of Regulations 3,4 or 5, he may delist the company in accordance with provisions of the Securities and Exchange Board of India (Delisting if Equity Shares) Regulations, 2009.
Takeover Regulations of SEBI will also not apply to the following:
- Transfer of shares amongst group of listed Companies, immediate relatives, qualifying promoters the acquirer and persons acting in concert;
- acquisition of shares by way of transmission on succession or inheritance;
- Transfer of shares from state level financial institutions including their subsidiaries, to co-promoters of the listed company pursuant to an agreement between such financial institution and such co-promoters;
- Acquisition of shares by a person in exchange of shares received under a public offer made under the said Regulations;
- Transfer of shares from venture capital funds or foreign venture capital investors registered with SEBI Board to promoters of a venture capital undertakings or venture capital undertaking pursuant to an agreement.
- Acquisition of shares of target listed company not involving change of control pursuant to a scheme of corporate debt restructuring notified by the Reserve Bank of India.
- Please note that if there is any acquirer acquiring shares or voting rights, which taken together with shares or voting rights if any held by the acquirer or by persons acting in concert with the acquirer, which would carry twenty five percent or more of the voting rights of your company and if so, check if the acquirer has made a public announcement to acquire shares at a minimum offer price from the other shareholders of the listed company.
- Please check if the acquirer has appointed a merchant banker holding a Certificate of Registration, who is not an associate of the acquirer before the public announcement of offer is made.
- Please check if the public announcement has been made in all editions of one national English daily with wide circulation, one Hindi national daily with wide circulation and a regional language with wide circulation at the place where the registered office of the target listed company is situated and at the place where the shares of the company are listed and more frequently traded.
Please also check whether simultaneously with publication of public announcement as aforesaid a copy of it is sent to the following:
- SEBI Board through the merchant banker ,
- Stock Exchanges on which the shares of the listed company are listed for being notified on the notice board,
- Target company of its registered office for being placed before the Board of Directors .
- Please note that the public announcement must be made on the date of agreement to acquire shares or voting rights in or control over the target listed company .
Further note that the public announcement must be made:
- In case of market purchases, prior to placement of purchase order with the stock broker;
- In case of convertible securities or depository receipts for the underlying shares of the target company, without a fixed date of conversion, on the same days as the date of exercise of the option to convert such securities into shares of the target listed company;
- Pursuant to an acquirer acquiring shares or voting rights in, or control over the target listed company upon conversion shall be made on the second working day proceeding the scheduled date of conversion of such securities into shares of the target listed company;
- In case of indirect acquisition of shares or voting rights in, or control over the target listed company where none of the parameters referred to in sub-regulation (2) of Regulation 5 are met, may be made at any time within four working days from the earlier of, the date on which the primary acquisition is contracted, and the date on which the intention or the decision to make the primary acquisition is announced in the public domain;
- In case of indirect acquisition of shares or voting rights in, or control over the target listed company where any of the parameters referred to in sub-regulation (2) of Regulation 5 are met, may be made at any time within four working days from the earlier of, the date on which the primary acquisition is contracted, and the date on which the intention or the decision to make the primary acquisition is announced in the public domain;
- Pursuant to the acquirer acquiring shares or voting rights in, or control over the target listed company, under the preferential issue, shall be made on the date on which special resolution is passed or allotment of shares under sub-section (1 A) of Section 81 of the Companies Act, 1956.
- The public announcement pursuant to an increase in voting rights consequential to a buy-back not qualifying for exemption under Regulation 10, shall be made not later than ninetieth day from the date of such increase in the voting rights beyond the relevant threshold stipulated in Regulations 3.
- The public announcement pursuant to any acquisition of shares or voting rights in control over the target listed company where the specific date on which title to such shares, voting rights or control is acquired is beyond the control of the acquirer, shall be made not later than two working days from the date of receipt of intimation of having acquired such title.
Public announcement must contain the following features:
- name and identity of the acquirer and persons acting in concert with him;
- name and identity of the sellers, if any;
- nature of the proposed acquisition such as purchase of shares or allotment of shares, or any other, means of acquisition of shares or voting rights in, or control over the target listed company;
- the consideration for the proposed acquisition that attracted the obligation to make an open offer for acquiring shares, and the price per share, if any;
- the offer price, and mode of payment of consideration; and
- offer size, and conditions as to minimum level of acceptance, if any.
- Please remember that copies of advertisement, circular, brochure, public material or letter of offer issued in relation to the acquisition issued for public announcement should not contain any misleading information .
- Please note that the acquirer through the merchant banker has to file a draft of the letter of offer to SEBI within five working days from the date of the detailed public statement along with non-refundable fee as per the Scale set out under the provision of the Act.
Ensure that the letter of offer contains jurisdiction of the basis of which the price has been determined and also note the following procedures:
- If within 15 working days from the date of submission of the letter of offer to the SEBI, it specifies any changes in that letter of offer, the merchant banker and the acquirer should carry out such changes before the letter of offer is dispatched to the shareholders. In case of any clarification or additional information by SEBI, the period of issuance of comments shall be extended to the fifth working day from the date of receipt of satisfactory reply to the clarification sought.
- The letter of offer will have to be sent to all the shareholders of the company not later than 7 working days from the date of receipt of comments from SEBI or where no comments are received, within seven days from the expiry of period stipulated in Regulation 16(4).
- There has to be an offer price which shall be payable either in cash or by issue, exchange or transfer of listed shares of the acquirer listed company or by issue, exchange or transfer of listed secured debt instruments of the acquirer company with a rating not inferior to investment grade as rated by a credit rating agency registered with SEBI or by issue, exchange or transfer of convertible debt securities, entitling the holder to acquire listed shares in the equity share capital of the acquirer or a combination of the mode of payment of consideration as stated above. The offer price shall be as per Regulation 8.
- Also note that the acquirer shall not complete the acquisition of shares or control over the target company until the expiry of the offer period. Amendment Regulations, 2015 provide that in case of a delisting offer made under Regulation 5A, the acquirer shall complete the acquisition of shares attracting the obligation to make an offer for acquiring after making the public announcement regarding the success of the delisting proposal made in terms of sub-regulation(1) Regulation 18 of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009.
An open offer for acquiring shares shall not be withdrawn except under the following circumstances:
- Statutory approvals required for the offer have been refused subject to the condition that such requirements for approvals have been disclosed in the detailed public statement and letter of offer.
- The acquirer being a natural person has died.
- any condition stipulated in the agreement for acquisition is not met for reasons which are outside the reasonable control of the acquirer and such agreement is rescinded. Where the circumstances as per SEBI justify withdrawal.
- In case of withdrawal of the open offer the acquirer shall within two working days make an announcement to this effect in the same newspapers in which the open offer was made setting out in detail the reasons therefor. He should also inform the stock exchanges in which the target listed company is listed , to the target listed company and also to SEBI.
- Once the public announcement of the open offer for acquiring shares of the target listed company is made, the Board of the target listed company shall ensure that the business is conducted in the ordinary course consistent with past practice.
- Ensure that during the offer period the target listed company shall not lease or alienate its material asserts without the approval of its members. It should also not make any material borrowings which are outside the ordinary course of business. It should also not affect any changes in its capital structure or carry out a buy-back of its shares.
- During the period of the open offer, the acquirer or the persons acting in concert shall not sell their holdings in the target listed company. The acquirer and the persons acting in connect shall be jointly and severally responsible for fulfillment of the obligations applicable under the regulations.
- Upon the fulfillment of the obligations of the acquirer the board of the target listed company shall without any delay register the transfer of shares acquired by the acquirer if in physical form whether under the agreement of pursuant to the open offer. The Board of the target listed company shall also make available to the acquirer any information that he may need and extend necessary co-operation.
- Keep in mind that SEBI may on an application made to it relax any or more of the provisions of Chapter 3 of the Takeover Regulations subject to the certain conditions.
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