Vide a press release dated October 27, 2008, SEBI has announced its decision to allow upto 5% creeping acquisitions between 55%-75% holding. However, the creeping acquisition between this slab can be only by “open market purchases in the normal segment” and not through bulk/block/negotiated deals or through preferential allotment.
It is not clear whether a person holding between 50 and 55% and who needs to acquire another 5% will need to have two types to acquisitions – one upto 55% and another type thereafter.
It has also been decided that if the holding of the Promoters increases on account of buyback of shares by the company, an increase upto 5% per annum would also be automatically exempt. The question that arises is whether increase of the holding of the Promoters on account of buyback of shares did otherwise attract the Takeover Regulations? – readers’ views are solicited. SEBI though has stated that exemption for such increase “was required to be sought”. Thus, if one agrees to the view that such exemption is required to be sought then now there is a relief but only upto 5%. However, if one takes a view that such increase does not require such an exemption, then such a limit would not apply.
The exemption of 5% increase on account of buyback is apparently only to the Promoters though the wording is not wholly clear. It is also to be seen whether this 5% exemption is all throughout between 15-75% or even beyond.
The above are only decisions and the actual amendments have yet to be made. Let us discuss more when the amendment is announced.
Jayant Thakur, CA