[Simran Sharma is a fourth year B.A.,LL.B (Trade and Investment Law Hons.) student at National Law University, Jodhpur} The Securities and Exchange Board of India (SEBI) provided informal guidance in June this year on the interpretation of the “inter se transfer exemption” under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Code”). This post aims to...
SEBI Informal Guidance: Scope of Prohibition
[The following post is contributed by Supreme Waskar, partner at Sterling Associates, Mumbai] Almondz Global Securities Limited (“AGSL”) is a stock broker and merchant banker registered with SEBI. On March 21, 2014 SEBI had prohibited AGSL from taking up any new assignment or involvement in any new issue of capital including an IPO, follow on issue etc, from the securities market in any manner...
Acquisitions Beyond 75% Shares in a Company: SEBI’s No-Action Letter
[The following is a guest post from Yogesh Chande. Yogesh is a Consultant with Economic Laws Practice, Advocates & Solicitors. The views expressed by the author are personal.] Recently, the Corporation Finance Department of SEBI issued a “no-action letter” in terms of SEBI (Informal Guidance) Scheme, 2003 for proposed acquisition by the promoters/promoter group of the target company up...
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...
Inter Se Promoter Exemption for Takeovers: Computation of Holding Period
A few days ago, SEBI made public its informal guidance issued to Weizmann Forex Ltd. on October 25, 2012. In this case, the target company became listed only in 2011 due to a corporate restructuring process. The question was whether certain shareholders can avail of the exemption for inter se promoter transfer by taking into account the promoter holdings in the previous company from which the...
Interpretive Guidance: Differential Rights on Shares
Section 86(a)(ii) of the Companies Act, 1956 as well as the Companies (Issue of Share Capital and Differential Voting Rights) Rules, 2001 permit the issue of shares with differential rights as to voting and dividend (DVRs) by companies, subject to certain conditions. Such issue of shares with DVRs has also been implicitly blessed by the Company Law Tribunal in Anand Pershad Jaiswal v. Jagatjit...
Depository Receipts and the Takeover Regulations
SEBI yesterday published its informal guidance in the matter pertaining to Bharti Airtel Limited. The question was whether the acquisition of 36% global depository receipts (GDRs) in Bharti Airtel Limited by MTN and its shareholders as part of the combination transaction would trigger various obligations under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. There are...
SEBI informal guidance – ESOP, Insider Trading and independent directors
The SEBI recently issued an informal guidance note on matters relevant to companies which are in the process of devising employee share option plans (ESOPs). A company contemplating an ESOP in accordance with the SEBI (ESOP and ESPS) Guidelines, 1999 wished to form an employee welfare trust to grant options to eligible employees and desired to appoint its Independent Directors as trustees of the...
Preposterous policy view from SEBI on QIPs and Public Shareholding
The Securities and Exchange Board of India has issued an informal guidance relating to the Listing Agreement and the SEBI (Disclosure and Investor Protection) Guidelines (“DIP Guidelines“) that defies all logic and reason. Clause 13.A.1.1(b) of the DIP Guidelines, which governs private placements to qualified institutional buyers, provides that a listed company ought to be in...
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