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8/8/2019 Takeover Code[1]
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INDIAN
TAKEOVERS
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Meaning Of Acqusition:
When an acquirer takes over thecontrol of the target company, it
is termed as takeover. When an
acquirer acquires substantial quantityof shares or voting rights of the Target
Company, it results into substantial
acquisition of shares.
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Types ofTakeover
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REGULATION 6REGULATION 6y It states that any person holding at the time
of commencement 5% or more of the
Shareholding must intimate to the Company
within 2 Months of date of notification andthe Company must intimate such holding to
stock exchange where the Companies
shares are listed within 3 months of the date
of notification. This is also applicable on the
Promoters of the Company.
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Regulation 7Regulation 7y Any Acquirer who acquires shares or the Voting rights which wouldentitle him to More than 5% or 10% or 15% or 54% or 74% mustdisclose within four days to the Company and Stock Exchangewhere shares are listed. The four days will be from 1) Date ofreceipt of Intimation 2) The acquisition of shares as the case maybe.
y Where the Acquirer has acquired the Shares together with personsacting in concert shall disclose purchase or sale aggregating to 2%or more of the share capital shall within four days disclose toCompany and stock exchange.
y The stock exchange must display information received on tradingscreen , the notice board and at website with 7 days of receipt of
Informationy The Company whose share have been acquired in manner stated
above must intimate such information to Stock exchange within7days of Receipt of information.
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Regulation 8 For continualRegulation 8 For continual
disclosure:disclosure:y Every person who holds more than 15% shares or
voting rights in any company shall within 21days fromthe end of Year (31st March.) must within 21 days
discloses to the Company about such holding. Thepromoter is required to disclose not only at the endof financial year but also the record date for purposeof declaration of Dividend.
y Every Company whose shares are listed on the stockexchange shall with in 30 days from the end offinancial year or from the Record date for dividendmust intimate such holding of shares to stockexchange.
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Regulation 9: Power to call forRegulation 9: Power to call for
informationinformation
y The stock exchange and the Company
shall submit information relating to
Regulation 6,7 and 8 to SEBI as and when
required by the Board
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Regulation 10: Acquisition of 10% orRegulation 10: Acquisition of 10% or
more shares by the Acquirermore shares by the Acquirer
y No acquirer Shall acquire which whenacquire in single or in persons acting inconcert with him entitle such acquirer toexercise 10% or more of the Voting rights ina company unless acquirer makes a publicannouncement. This is not required wheresuch acquisition is on a right share basis andsuch acquisition does not result in holdingmore than 55% of the voting rights
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Regulation 11 Consolidation ofRegulation 11 Consolidation of
SharesSharesy No acquirer shall acquire additional shares entitling him to
exercise more than 10% voting rights along with the votingrights he already has in any financial year unless publicannouncement is made for such acqusition
y No acquirer who holds 55% or more but less than 75% shallacquire either by himself or through the persons acting inconcert unless public announcement for same has beenmade.
y Where the case involved is of disinvestment of a publicsector undertaking an acquirer who together with persons
acting in concert with him has made a public announcementshall not be required to make further announcement forfurther acquisition of shares
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Regulation 12 Acquisition ofRegulation 12 Acquisition of
Control over the CompanyControl over the Company
y Control on target company cannot
cannot be acquired unless publicannouncement for same has been made.
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Regulation 13 : Appointment ofRegulation 13 : Appointment of
Merchant BankerMerchant Bankery Before making public announcement for
acquiring shares under regulation 10,11
and 12 an acquirer must appointMerchant Banker holding a certificate of
registration granted by Board and
merchant banker must not be associatedwith acquirer or group of acquirer
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Regulation 14: Timing of PublicRegulation 14: Timing of Public
Announcement of OfferAnnouncement of Offery The Public announcement shall be made
by the merchant banker within four
working days of entering into agreementfor acquisition of shares exceeding the
prescribed limits.
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Regulation 15: Public announcementRegulation 15: Public announcement
of offerof offery The public announcement under reg 10,11 and 12
must be made in all editions one English nationaldaily, one Hindi national daily and regionallanguage where the registered office of the targetcompany is located and at the place where theshares are frequently traded.
y The copy of same must be submitted to Boardthrough the merchant banker
y
Sent to all stock exchange where the shares ofthe companies are listed
y Sent to target company at its registered office
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Regulation 16 Contents of publicRegulation 16 Contents of public
announcement of offerannouncement of offer Paid up share capital of the target company, number of fully paid up and
partly paid up shares
Percentage of shares proposed to be acquired
Minimum offer price for each share
Identity of persons having control over such company Existing shareholding of acquirer
Existing shareholding of merchant banker in target company
Highest and average price paid by acquirer or persons acting in concertduring 12 months preceding to date of public announcement
Object and purpose of acquisition
Specified date as mentioned in Regulation 19 Date by which the individual letters of offer would be posted to each of
the shareholder
Date of opening and closure of offer
Date by which the payment of consideration would be made for share
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Regulation 17: Brochures,Regulation 17: Brochures,
advertising materialadvertising materialy The public announcement must not
contain any misleading information
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Regulation 18: Submission of letterRegulation 18: Submission of letter
of offer to the Boardof offer to the Boardy Within 14 days from the date of public
announcement acquirer shall through the
merchant banker file with the Board draftof letter of offer which must be submittedto shareholders within 21days from thedate of its submission to Board
y Fees to be paid along with submission toBoard depending on the issue size
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Regulation 19: Specified dateRegulation 19: Specified date
y The public announcement shall specify the
date for determining the names of
shareholders to whom the letter of offer
should be sent. The specified date cannotbe later than 30th day from the date of
public announcement
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Regulation 20: Offer PriceRegulation 20: Offer Pricey Where the shares of the Company are frequently traded: The minimum offerprice will be the highest of the following: The negotiated price as per the agreement
The highest of the price paid by the acquirer or persons acting in concert with him forany acquisition including by way of allotment or right issue during the 26 weeks periodprior to date of public announcement
The price paid by the acquirer under the preferential allotment to him or the person
acting in concert at any time during the 12 months period up to the date of closure ofoffer
The average of the weekly high and low of the closing prices of the shares of the targetcompany as quoted on the stock exchange during the 26 weeks preceding to the date ofpublic announcement.
When the shares of the company are not frequently traded: The minimum offerprice will be highest of the following:
The first three points will be same as if the shares are frequently traded.
The fourth point will be : price determined taking into consideration the factors like: Netprofit of the Company, Earning per share , book value of shares of the target company.
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Regulation 21: Minimum number ofRegulation 21: Minimum number of
shares acquiredshares acquiredy The public offer made by the acquirer to
the shareholders of the target company
shall be for minimum 20% of the votingcapital of the Company
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Regulation 22,23 and 24Regulation 22,23 and 24y These three regulations deals with:
Obligation of Acquirer (22)
Obligation of Board of Directors of thetarget company.(23)
Obligation of Merchant Banker(24)
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Regulation 25: Competitive BidRegulation 25: Competitive Bidy Any person, other than the acquirer who has
made the first public announcement , canmake a public announcement within 21 days
from the date of first public announcement.y Any competitive offer shall be for such
number of shares which when takentogether with the shares held by him alongwith person acting in concert shall be at
least equal to or more than holding of firstbidder.
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Regulation 26: Revision of offerRegulation 26: Revision of offery The acquirer can at any time up to 7
working days prior to date of closure of
offer. The revisions can be in respect of
following:
Changes in original public announcement in
all newspapers where the original public
announcement was made Increasing the value of Escrow account
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Regulation 27: Withdrawal of offerRegulation 27: Withdrawal of offery No public offer can be withdrawn except under
the following circumstances:
The statutory approval(s) required have been
refused The sole acquirer being a natural person has died
Withdrawal must be subject to:
Publish about the withdrawal in the newspapersin which the offer for public announcement was
made Intimate to stock exchange, Board and the target
company about such withdrawal
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Regulation 29: Payment ofRegulation 29: Payment of
considerationconsideration
y Amount of such sum payable must be
deposited within 7 days from the closure
of offer with a Banker to an issue
registered with the Board together with
90% of the amount lying in escrow
account
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TULSI DARYANANI