TagCreeping Acquisition

SEBI order in Educomp matter

A recent SEBI order has granted an exemption to Educomp’s CMD, Mr. Shantanu Prakash from having to make an open offer in relation to an acquisition of 7.5% of the shareholding of Educomp. At the outset, we should look at the facts in this case which are quite peculiar – Educomp’s CMD, Mr. Shantanu Prakash had pledged 91.8 lakh shares (7.5% of the  share capital) of Educomp...

Takeover Regulations: Computing Creeping Acquisition Limits

SEBI has published its informal guidance on a matter that delves into the mechanics of computing the creeping acquisition limit of 5% per year in a company whose share capital may have undergone changes during the same period. Aksh Optifibre Limited made an application on August 17, 2012 to SEBI to seek its informal guidance on the specifics of its case. The company’s promoters had made a series...

Buybacks and open offer – recent decision of SAT

Recently, on 21st November 2011, the Securities Appellate Tribunal (SAT) held that the increase in percentage holding of a person consequent to buyback of shares does not amount to acquisition and thus cannot result in an open offer. This is, in my view, a correct legal interpretation of the law (as also argued by me in an earlier post here). But SEBI had, in practice, taken a view that such...

Buyback and Takeover Regulations – Yet another development

See my earlier post on a recent decision of SEBI on whether increase in percentage holding consequent to buyback of shares would amount to “acquisition” under the Takeover Regulations. If that and earlier posts are reviewed, one would note that SEBI has taken a fairly consistent stand that such increase does amount to acquisition. Now, in a recent order granting exemption under the...

Buyback, increase in shareholding and open offer requirement

Yesterday’s decision of SEBI revives the discussion on whether an increase in shareholding on account of a buyback could result in an open offer. The issue can be explained mathematically as follows. A company, has, say, Rs. 100 of share capital. It carries out a buyback of Rs. 20 shares in which some shareholders do not participate fully. Since the share capital reduces to Rs. 80, the...

SEBI issues circular to formalise clarifications on 5% additional creeping acquisition

I had briefly written in an earlier post of a report in CNBC/moneycontrol.com of certain “clarifications” in respect of the amendments to Regulation 11(2) of the SEBI Takeover Regulations. As may be recollected, the amendments permitted acquisition of further shares upto 5% for persons who held shares between 55-75%. This press report has now been formalised by a clarifying circular...

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