Takeover Code - India - 1

SECURITIES AND EXCHANGE BOARD OF INDIA
(SUBSTANTIAL ACQUISTION OF SHARES AND TAKEOVERS)
REGULATIONS, 1997





Some Important Provisions

CHAPTER I

PRELIMINARY
Short title and commencement

1 (1) These Regulations shall be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
(2) These Regulations shall come into force on the date of their publication in the Official Gazette.

Definitions

2 (1) In these Regulations, unless the context otherwise requires:-
(a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(b) "acquirer" means any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer;
(c) "control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;
["Explanation:(i) Where there are two or more persons in control over the target company, the cesser of any one of such persons from such control shall not be deemed to be a change in control of management nor shall any change in the natureand quantum of control amongst them constitute change in control of management.
Provided that the transfer from joint control to sole control iseffected in accordance with clause (e) of sub - regulation (1) of regulation3.
(ii). If consequent upon change in control of the target companyin accordance with regulation 3, the control acquired is equal to or lessthan the control exercised by person (s) prior to such acquisition of control,such control shall not be deemed to be a change in control".]
(cc) "disinvestment" means the sale by the Central Government 3[orby the State Government as the case may be] of its shares or voting rights and / or control in a listed Public Sector Undertaking;]

(d) "investigating officer" means any person appointed by the Board under Regulation 38;

(e) "person acting in concert" comprises, -
(1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company.
(2) Without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established :
(i) a company, its holding company, or subsidiary of such company or company under the same management either individually or together with each other;
(ii) a company with any of its directors, or any person entrusted with the management of the funds of the company;
(iii) directors of companies referred to in sub-clause(i) of clause (2) and their associates;
(iv) mutual fund with sponsor or trustee or asset management company;
(v) foreign institutional investors with sub account(s);
(vi) merchant bankers with their client(s) as acquirer;
(vii) portfolio managers with their client(s) as acquirer;
(viii) venture capital funds with sponsors;
(ix) banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer.
Provided that sub-clause (ix)shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work.
(x) any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2% of the paid-up capital of that company or with any other investment company in which such person or his associate holds not less than 2% of the paid up capital of the latter company.
Note: For the purposes of this clause `associate' means:
(a) any relative of that person within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and
(b) family trusts and Hindu Undivided Families.
(f) "offer period" means the period between the date of entering into Memorandum of Understanding or the public announcement, as the case may be and the date of completion of offer formalities relating to the offer made under these regulations.];
(g) "panel" means a panel constituted by the Board for the purpose of Regulation4;
5
(h)."Promoter" means -

(a) any person who is in control of the target company;
(b) any person named as promoter in any offer document of the target company or any shareholding pattern filed by the target company with the stock exchanges pursuant to the Listing Agreement, whichever is later;
and includes any person belonging to the promoter group as mentioned in Explanation I:
Provided that a director or officer of the target company or any other person shall not be a promoter, if he is acting as such merely in his professional capacity.
Explanation I: For the purpose of this clause, 'promoter group' shall include:
(a) in case promoter is a body corporate -
(i) a subsidiary or holding company of that body corporate;
(ii) any company in which the promoter holds 10% or more of the equity capital or which holds 10% or more of the equity capital of the promoter;
(iii) any company in which a group of individuals or companies or combinations thereof who holds 20% or more of the equity capital in that company also holds 20% or more of the equity capital of the target company; and
(b) in case the promoter is an individual -
(i) the spouse of that person, or any parent, brother, sister or child of that person or of his spouse;
(ii) any company in which 10% or more of the share capital is held by the promoter or an immediate relative of the promoter or a firm or HUF in which the promoter or any one or more of his immediate relative is a member;
(iii) any company in which a company specified in (i) above, holds 10% or more, of the share capital; and
(iv) any HUF or firm in which the aggregate share of the promoter and his immediate relatives is equal to or more than 10% of the total.
Explanation II: Financial Institutions, Scheduled Banks, Foreign Institutional Investors (FIIs) and Mutual Funds shall not be deemed to be a promoter or promoter group merely by virtue of their shareholding. Provided that the Financial Institutions, Scheduled Banks and Foreign Institutional Investors (FIIs) shall be treated as promoters or promoter group for the subsidiaries or companies promoted by them or mutual funds sponsored by them.

(i) "public financial institution" means a public financial institution as defined in Section 4A of the Companies Act, 1956.
(ii)"Public Sector Undertaking" means a company in which the Central Government7[or a State Government holds 50% or more of its equity capital or is in control of the company;

(j)"public shareholding" means shareholding held by persons other than promoters as defined under clause (h)
(k) "shares" means shares in the share capital of a company carrying voting rights and includes any security which would entitle the holder to receive shares with voting rights 8[but shall not include preference shares].

(l) "sick industrial company" shall have the same meaning assigned to it in clause (o) of sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) or any statutory re-enactment thereof.

(m) "state level financial institution" means a state financial corporation established under Section 3 of the State Financial Institutions Act, 1951and includes development corporation established as a company by a State Government with the object of development of industries or agricultural activities in the state;

(n) "stock exchange" means a stock exchange which has been granted recognition under Section 4 of the Securities Contracts (Regulation) Act, 1956 (42of 1956);

(o) "target company" means a listed company whose shares or voting rights or control is directly or indirectly acquired or is being acquired;

(p) "working days" shall mean the working days of the Board."]

(2) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956, or the Companies Act, 1956, or any statutory modification or reenactment thereto, as the case may be.

The Takeover Panel


4. (1) The Board shall for the purposes of this Regulation constitute a Panel of majority of independent persons from within the categories mentioned in sub-section (5) of Section 4 of the Act.
(2) For seeking exemption underclause (l) of sub-regulation (1) of Regulation (3), the acquirer shall file an application 27[supported by a duly sworn affidavit] with the Board, giving details of the proposed acquisition and the grounds on which the exemption has been sought.[Formatof application]
(3) The acquirer shall, along with the application referred to under sub pay a fee of 27a [one lakh rupees] to the Board, either by a bankers cheque or demand draft in favor of the Securities and Exchange Board of India, payable at Mumbai.
(4) The Board shall within 5 days of the receipt of an application under sub-regulation(2) forward the application to the Panel.
(5) The Panel shall within 15 days from the date of receipt of application make a recommendation on the application to the Board.
(6) The Board shall after affording reasonable opportunity to the concerned parties and after considering all the relevant facts including the recommendations, if any, pass a reasoned order on the application under sub-regulation (2) within 30days thereof.
(7) The order of the Board under sub-regulation(6) shall be published by the Board.


CHAPTER II

DISCLOSURES OF SHAREHOLDING AND CONTROL IN A LISTED COMPANY

Acquisition of 5% and more shares of a company
7.(1) Any acquirer, who acquires shares or voting rights which(taken together with shares or voting rights, if any, held by him) would entitle him to more than five per cent or ten per cent. or fourteen percent.28aor fifty four per cent. or seventy four per cent shares or voting rights ina company, in any manner whatsoever, shall disclose at every stage the aggregate of his shareholding or voting rights in that company to the company and to the stock exchanges where shares of the target company are listed.]
(1A) Any acquirer who has acquired shares or voting rights of a company under sub-regulation(1) of regulation 11, shall disclose purchase or sale aggregating two percent. or more of the share capital of the target company to the target company, and the stock exchanges where shares of the target company are listed within two days of such purchase or sale along with the aggregate shareholding after such acquisition or sale.]
[Explanation- for the purposes of sub-regulations (1) and (1A), the term 'acquirer? shall include a pledgee, other than a bank or a financial institution and such pledgee shall make disclosure to the target company and the stock exchange within two days of creation of pledge.]
(2) The disclosures mentioned in 31*[sub-regulations(1) and (1A)] shall be made within 32[twodays], -
(a) the receipt of intimation of allotment of shares; or
(b) the acquisition of shares or voting rights, as the case may be.
(2A) The stock exchange shall immediately display the information received from the acquirer under sub-regulations (1) and (1A) on the trading screen, the notice board and also on its website.]
(3) Every company, whose shares are acquired in a manner referred to in 34*[sub-regulation(1) and (1A)] shall disclose to all the stock exchanges on which the shares of the said company are listed the aggregate number of shares held by each of such persons referred above within seven days of receipt of information under35*[sub-regulations(1) and (1A)]

Continual disclosures

8. (1) Every person, including a person mentioned in Regulation6 who holds more than
fifteen percent shares or voting rights in any company, shall, within 21 days from the financial year ending March 31, make yearly disclosures to the company, in respect of his holdings as on 31st March.
(2) A promoter or every person having control over a company shall, within 21 days from the financial year ending March31, as well as the record date of the company for the purposes of declaration of dividend, disclose the number and percentage of shares or voting rights held by him and by persons acting in concert with him, in that company to the company.
(3) Every company whose shares are listed on a stock exchange, shall within 30 days from the financial year ending March 31, as well as the record date of the company for the purposes of declaration of dividend, make yearly disclosures to all the stock exchanges on which the shares of the company are listed, the changes, if any, in respect of the holdings of the persons referred to under sub-regulation (1) and also holdings of promoters or person(s) having control over the company as on 31st March.
(4) Every company whose shares are listed on a stock exchange shall maintain a register in the specified format to record the information received under sub-regulation(3) of Regulation 6, sub-regulation (1) of Regulation7 and sub-regulation (2) of Regulation 8.

CHAPTER III

SUBSTANTIAL ACQUISITION OF SHARES OR VOTING RIGHTS IN AND ACQUISITIONOF CONTROL OVER A LISTED COMPANY

Acquisition of fifteen or more of the shares or voting rights of any company.

10. No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen percent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations.





Consolidation of holdings

11. (1) No acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, 15per cent or more but less than fiftyfive 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, in any financial year ending on 31st March, unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations.

(2) No acquirer, who together with persons acting in concert with him holds, fifty five per cent. (55%) or more but less than seventy five per cent. (75%) of the shares or voting rights in a target company, shall acquire either by himself or through persons acting in concert with him any additional shares or voting rights therein, unless he makes a public announcement to acquire shares in accordance with these Regulations:
Provided that in a case where the target company had obtained listing of its shares by making an offer of at least ten per cent. (10%) of issue size to the public in terms of clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, or in terms of any relaxation granted from strict enforcement of the said rule, this sub-regulation shall apply as if for the words and figures ?seventy five per cent. (75%)?, the words and figures ?ninety per cent. (90%)? were substituted.

(2A) Where an acquirer who (together with persons acting in concert with him) holds fifty five per cent. (55%) or more but less than seventy five per cent. (75%) of the shares or voting rights in a target company, is desirous of consolidating his holding while ensuring that the public shareholding in the target company does not fall below the minimum level permitted by the Listing Agreement, he may do so only by making a public announcement in accordance with these regulations:
Provided that in a case where the target company had obtained listing of its shares by making an offer of at least ten per cent. (10%) of issue size to the public in terms of clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, or in terms of any relaxation granted from strict enforcement of the said rule, this sub-regulation shall apply as if for the words and figures ?seventy five per cent. (75%)?, the words and figures ?ninety per cent. (90%)? were substituted.
43*[ (3)Not withstanding anything contained in Regulations10, 11 and 12, in case of disinvestment of a Public Sector Undertaking , an acquirer who together with persons acting in concert with him, has made a public announcement, shall not be required to make another public announcement at the subsequent stage of further acquisition of shares or voting rights or control of the Public Sector Undertaking provided:-
(i) both the acquirer and the seller are the same at all the stages of acquisition, and
(ii) disclosures regarding all the stages of acquisition, if any, are made in the letter of offer issued in terms of Regulation 18 and in the first public announcement.]
Explanation:- For the purposes of Regulation 10 andRegulation11, acquisition shall mean and include,-
(a) direct acquisition in a listed company to which the Regulations apply;
(b) indirect acquisition by virtue of acquisition of44[*]companies, whether listed or unlisted, whether in India or abroad.
Acquisition of control over a company
12. Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the Regulations.
Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a 45[special resolution] passed by the shareholders in a general meeting.
46["Provided further that for passing of the special resolution facility of voting through postal ballot as specified under the Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001 shall also be provided.]
Explanation:
47[For the purposes of this Regulation, acquisition shall include direct or indirect acquisition of control of target company by virtue of acquisition of companies, whether listed or unlisted and whether in India or abroad]
Appointment of a Merchant Banker
13. Before making any public announcement of offer referred to in Regulation10 or Regulation 11 or Regulation12, the acquirer shall appoint a merchant banker in Category-I holding a certificate of registration granted by the Board, who is not associate of or group of the acquirer or the target company
Timing of the Public Announcement of Offer
14. (1) The public announcement referred to in Regulation10 or Regulation 11 shall be made by the merchantbanker not later than four working days of entering into an agreement for acquisition of shares or voting rights or deciding to acquire shares or voting rights exceeding the respective percentage specified therein:
48*[Provided that in case of disinvestment of a Public Sector Undertaking, the public announcement shall be made by the merchant banker not later than 4 working days of the acquirer executing the Share Purchase Agreement or Shareholders Agreement with the Central Government 49[or the State Government as the case may be] for the acquisition of shares or voting rights exceeding the percentage of share holding referred to in Regulation 10 or Regulation11 or the transfer of control over a target Public Sector Undertaking]
(2) In case of an acquirer acquiring securities, including Global Depositories Receipts or American Depository Receipts which, when taken together with the voting rights, if any already held by him or persons acting in concert with him, would entitle him to voting rights, exceeding the percentage specified in Regulation 10 or Regulation11, the public announcement referred to in sub-regulation(1) shall be made not later than four working days before he acquires voting rights on such securities upon conversion, or exercise of option, as the case may be.
(3) The public announcement referred to in Regulation12 shall be made by the merchant banker not later than four working days after any such change or changes are decided to be made as would result in the acquisition of control over the target company by the acquirer.
50[(4) Incase of indirect acquisition or change in control, a public announcement shall be made by the acquirer within three months of consummation of such acquisition or change in control or restructuring of the parent or the company holding shares of or control over the target company in India.]
Public Announcement of Offer
15. (1) The public announcement to be made under Regulations10 or Regulation 11 or Regulation12 shall be made in all editions of one English national daily with wide circulation, one Hindi national daily with wide circulation and a regional language daily with wide circulation at the place where the registered office of the target company is situated and at the place of the stock exchange where the shares of the target company are most frequently traded.
51[2) Simultaneously with publication of the announcement in the newspaper in terms of sub-regulation (1), a copy of the public announcement shall be,
(i) submitted to the Board through the merchant banker,
(ii) sent to all the stock exchanges on which the shares of the company are listed for being notified on the notice board,
(iii) sent to the target company at its registered office for being placed before the Board of Directors of the company.]
52[(3)]
?(4) The offer under these Regulations shall be deemed to have been made on the date on which the public announcement has appeared in any of the newspapers referred to in sub-regulation (1).
Contents of the Public Announcement of Offer
16. The public announcement referred to in Regulations 10 orRegulation11 or Regulation 12 shall contain the following particulars, namely :-
(i) the paid up share capital of the target company, the number of fully paid up and partly paid up shares;
(ii) the total number and percentage of shares proposed to be acquired from the public, subject to a minimum as specified in sub-regulation(1) of Regulation 21;
(iii) the minimum offer price for each fully paid-up or partly paid up share;
(iv) mode of payment of consideration;
(v) the identity of the acquirer(s) and in case the acquirer is a company or companies, the identity of the promoters and, or the persons having control over such company(ies) and the group, if any, to which the company(ies) belong;
(vi) the existing holding, if any, of the acquirer in the shares of the target company, including holdings of persons acting in concert with him;
52a(via)the existing shareholding, if any, of the merchant banker in the target company ;
(vii) salient features of the agreement, if any, such as the date, the name of the seller, the price at which the shares are being acquired, the manner of payment of the consideration and the number and percentage of shares in respect of which he acquirer has entered into the agreement to acquire the shares or the consideration, monetary or otherwise, for the acquisition of control over the target company, as the case maybe;
(viii) the highest and the average price paid by the acquirer or persons acting in concert with him for acquisition, if any, of shares of the target company made by him during the twelve month period prior to the date of public announcement;
(ix) Object and purpose of the acquisition of the shares and future plans, if any, of the acquirer for the target company, including disclosures whether the acquirer proposes to dispose of or otherwise encumber any assets of the target company in the succeeding two years, except in the ordinary course of business of the target company
Provided that where the future plans are set out , the public announcement shall also set out how the acquirers propose to implement such future plans.
53["Provided further that the acquirer shall not sell, dispose of or otherwise encumber any substantial asset of the target company except with the prior approval of the shareholders.
(ixa) an undertaking that the acquirer shall not sell, dispose of or otherwise encumber any substantial asset of the target company except with the prior approval of the shareholders.]
(x) the `specified date' as mentioned in Regulation19;
(xi) the date by which individual letters of offer would be posted to each of the shareholders;
(xii) the date of opening and closure of the offer and the manner in which and the date by which the acceptance or rejection of the offer would be communicated to the shareholders;
(xiii) the date by which the payment of consideration would be made for the shares in respect of which the offer has been accepted;
(xiv) disclosure to the effect that firm arrangement for financial resources required to implement the offer is already in place, including details regarding the sources of the funds whether domestic i.efrom banks, financial institutions, or otherwise or foreign i.e., from Non-Resident Indians or otherwise.
(xv) provision for acceptance of the offer by person(s)who own the shares but are not the registered holders of such shares;
(xvi) statutory approvals, if any, required to be obtained for the purpose of acquiring the shares under the Companies Act,1956 (1 of 1956), the Monopolies and Restrictive Trade Practices Act, 1969(54 of 1969), The Foreign Exchange Regulation Act, 1973, (46 of 1973) and/or any other applicable laws;
(xvii) approvals of banks or financial institutions required, if any;
(xviii) whether the offer is subject to a minimum level of acceptance from the shareholders; and
(xix) such other information as is essential for the shareholders to make an informed decision in regard to the offer.
Brochures, advertising material etc.
17. The public announcement of the offer or any other advertisement, circular, brochure, publicity material or letter of offer issued in relation to the acquisition of shares shall not contain any misleading information.
Submission of Letter of offer to the Board

18 (1) Within fourteen days from the date of public announcement made under Regulation 10, Regulation11 or Regulation 12 as the case may be, the acquirer shall, through its merchant banker, file with the Board, the draft of the letter of offer, containing disclosures as specified by the Board.

(2) The letter of offer shall be dispatched to the shareholders not earlier than 21 days from its submission to the Board under sub-regulation(1).
Provided that if, within 21 days from the date of submission of the letter of offer, the Board specifies changes, if any, in the letter of offer, (without being under any obligation to do so) the merchant banker and the acquirer shall carry out such changes before the letter of offer is dispatched to the shareholders.

Provided further that if the disclosures in the draft letter of offer are inadequate or the Board has received any complaint or has initiated any enquiry or investigation in respect of the public offer, the Board may call for revised letter of offer with or without rescheduling the date of opening or closing of the offer and may offer its comments to the revised letter of offer within seven working days of filing of such revised letter of offer.

55[Offer price.
20(1) The offer to acquire shares under regulations10,11 or 12 shall be made at a price not lower than the price determined as per sub-regulations (4)and (5).
(2) The offer price shall be payable -
(a) in cash ;
(b) by issue, exchange and, or transfer of shares (other than preference shares) of acquirer company, if the person seeking to acquire the shares is a listed body corporate; or
(c) by issue, exchange and, or transfer of secured instruments of acquirer company with a minimum ?A? grade rating from a credit rating agency registered with the Board;
(d) a combination of clause (a),(b)or (c) :
Provided that where the payment has been made in cash to any class of shareholders for acquiring their shares under any agreement or pursuant to any acquisition in the open market or in any other manner during the immediately preceding twelve months from the date of public announcement, the letter of offer shall provide an option to the shareholders to accept payment either in cash or by exchange of shares or other secured instruments referred to above:
Provided further that the mode of payment of consideration may be altered in case of revision in offer price or size subject to the condition that the amount to be paid in cash as mentioned in any announcement or the letter of offer is not reduced.
(3) In case the offer price consists of consideration payable in the form of securities issuance of which requires approval of the shareholders, such approval shall be obtained by the acquirer within 55i[seven days] from the date of closure of the offer:
Provided that in case the requisite approval is not obtained, the acquirer shall pay the entire consideration in cash.
(4) For the purposes of sub-regulation (1), the offer price shall be the highest of -
(a) the negotiated price under the agreement referred to in sub-regulation(1) of regulation 14;
(b) price paid by the acquirer or persons acting in concert with him for acquisition, if any, including by way of allotment in a public or rights or preferential issue during the twenty six week period prior to the date of public announcement, whichever is higher;
(c) the average of the weekly high and low of the closing prices of the shares of the target company as quoted on the stock exchange where the shares of the company are most frequently traded during the twenty-six weeks or the average of the daily high and low of the 55ia{deleted}prices of the shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two weeks preceding the date of public announcement, whichever is higher.
55a[Provided that the requirement of average of the daily high and low of the closing prices of the shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two weeks preceding the date of public announcement, shall not be applicable in case of disinvestment of a Public Sector Undertaking.] ?
Explanation:
In case of disinvestment of a Public Sector Undertaking, the relevant date for the calculation of the average of the weekly prices of the shares of the Public Sector Undertaking, as quoted on the stock exchange where its shares are most frequently traded, shall be the date preceding the date when the Central Government or the State Government opens the financial bid.
(5) Where the shares of the target company are infrequently traded, the offer price shall be determined by the acquirer and the merchant banker taking into account the following factors:
(a) the negotiated price under the agreement referred to in sub-regulation(1) of regulation 14;
(b) the highest price paid by the acquirer or persons acting in concert with him for acquisitions, if any, including by way of allotment in a public or rights or preferential issue during the twenty six week period prior to the date of public announcement;
(c) other parameters including return on net worth, book value of the shares of the target company, earning per share, price earning multiple vis-୶is the industry average:
Provided that where considered necessary, the Board may require valuation of such infrequently traded shares by an independent merchant banker (other than the manager to the offer) or an independent chartered accountant of minimum ten
years? standing or a public financial institution.
Explanation :-
(i) For the purpose of sub-regulation (5), shares shall be deemed to be infrequently traded if on the stock exchange, the annualized trading turnover in that share during the preceding six calendar months prior to the month in which the public announcement is made is less than five percent. (by number of shares) of the listed shares. For this purpose, the weighted average number of shares listed during the said six months period may be taken.
(ii) In case of disinvestment of a Public Sector Undertaking, the shares of such an undertaking shall be deemed to be infrequently traded, if on the stock exchange, the annualized trading turnover in the shares during the preceding six calendar months prior to the month, in which the Central Government or the State Government as the case may be opens the financial bid, is less than five per cent. (by the number of shares) of the listed shares. For this purpose, the weighted average number of shares listed during the six months period may be taken.
(iii)In case of shares which have been listed within six months preceding the public announcement, the trading turnover may be annualised with reference to the actual number of days for which the shares have been listed.
(6) Notwithstanding anything contained in sub-regulation (5), in case of disinvestment of a Public Sector Undertaking, whose shares are infrequently traded, the minimum offer price shall be the price paid by the successful bidder to the Central Government or the State Government, arrived at after the process of competitive bidding of the Central Government or the State Government for the purpose of disinvestment.
(7) Notwithstanding anything contained in the provisions of sub-regulations(2), (4),(5) and (6), where the acquirer has acquired shares in the open market or through negotiation or otherwise, after the date of public announcement at a price higher than the offer price stated in the letter of offer, then, the highest price paid for such acquisition shall be payable for all acceptances received under the offer:
Provided that no such acquisition shall be made by the acquirer during the last seven working days prior to the closure of the offer.
55b[55c Provided further that nothing contained in sub-regulation (7) shall be construed to authorise an acquirer who makes a public announcement in terms of sub-regulation (2A) of regulation 11 to acquire any shares during the offer period in the open market or through negotiation or in any other manner otherwise than under the public offer.
(8) Any payment made to the persons other than the target company in respect of non compete agreement in excess of twenty five per cent. of the offer price arrived at under sub-regulations (4) or (5) or (6)shall be added to the offer price.
(9) In case where shares or secured instruments of the acquirer company are offered in lieu of cash payment, the value of such shares or secured instruments shall be determined in the same manner as specified in sub-regulation(4) or sub-regulation (5) to the extent applicable, as duly certified byan independent merchant banker (other than the manager to the offer) oran independent chartered accountant of a minimum ten years standing or a public financial institution.
(10) The offer price for partly paid up shares shall be calculated as the difference between the offer price and the amount due towards calls-in-arrears or calls remaining unpaid together with interest, if any, payable on the amount called up but remaining unpaid.
(11) The letter of offer shall contain justification or the basis on which the price has been determined.
Explanation:
(i) The highest price under clause (b) or the average price under clause(c) of sub-regulation (4) may be adjusted
for quotations, if any, on cum-rights or cum-bonus or cum-dividend basis during the said period.
(ii) Where the public announcement of offer is pursuant to acquisition by way of firm allotment in a public issue or preferential allotment, the average price under clause (c) of sub-regulation (4) shall be calculated with reference to twenty six week period preceding the date of the board resolution which authorized the firm allotment or preferential allotment.
(iii) Where the shareholders have been provided with an option to accept payment either in cash or by way of exchange of security, the pricing for the cash offer could be different from that of a share exchange offer or offer for
exchange with secured instruments provided that the disclosures in the letter of offer contains suitable justification for such differential pricing and the pricing is subject to other provisions of this regulation.
(iv) Where the offer is subject to a minimum level of acceptance, the acquirer may, subject to the other provisions of this regulation, indicate a lower price for the minimum acceptance upto twenty per cent., should the offer not receive full acceptance.
(12) The offer price for indirect acquisition or control shall be determined with reference to the date of the public announcement for the parent company and the date of the public announcement for acquisition of shares of the target company, whichever is higher, in accordance with sub-regulation (4) or sub-regulation (5).]
56[Acquisition price under creeping acquisition
"20A. (1) An acquirer who has made a public offer and seeks to acquire further shares under sub-regulation (1) of regulation 11 shall not acquire such shares during the period of 6 months from the date of closure of the public offer at a price higher than the offer price.
(2) Sub-regulation (1) shall not apply where the acquisition is made through the stock exchanges.]
Minimum number of shares to be acquired
57[21. (1)The public offer made by the acquirer to the shareholders of the target company shall be for a minimum twenty per cent of the voting capital of the company.]