(The following post has been contributed by Avinash Balasubramaniam, who is an alumnus of the ILS Law College and a practising lawyer based in Chennai) The Securities Appellate Tribunal (SAT) yesterday delivered its verdict in the Zenotech open offer case directing Daichi to offer Rs.160/share to the shareholders of Zenotech. So is Dr. Jayaram Chirugupati, the chief protagonist in the challenge...
Contestability of Corporate Control
In a column in the Business Standard, Nitin Desai argues that the current ecosystem in India provides greater benefits to corporate control, resulting in a number of large Indian companies being managed by the promoter-owners. Corporate control may be susceptible to challenge if there is a market for control facilitated by a liberal takeover regime. However, as we have seen (here and here), the...
Inputs and Suggestions to TRAC
The Takeover Regulations Advisory Committee (discussed earlier) has invited inputs and suggestions regarding suitable amendments to the SEBI Takeover Regulations. This is part of the committee’s consultative process. Suggestions are due in the prescribed format by October 31, 2009. The background for the proposed amendments is as follows: There have … been various prominent judgments by Hon’ble...
Revamping the Takeover Code
After consolidating the regulations relating to primary markets (as discussed in the previous post), SEBI has embarked upon the next exercise of revamping the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (popularly known as the Takeover Code). It has appointed a Takeover Regulations Advisory Committee (TRAC) to advise on changes to the made to the Takeover Code. I am...
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...
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...
Directors are persons in control; failure to disclose their shareholding violates Takeover Regulations
In a far-reaching decision, the Securities and Exchange Board of India has ruled in an adjudication order that members of the board of directors of a listed company (“Target Company”) would be persons having control of the Target Company. Consequently, directors of the Target Company ought to make disclosures of their holdings under the disclosure requirements set out in the SEBI (Substantial...
Amendments to Takeover Regulations differently wide and narrow
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Regulations”) were amended last week to empower SEBI to grant exemptions from the strict operation of various operative provisions of the Takeover Regulations – initial comments on this blog were posted here. I wrote the following comment in the Economic Times, edition dated February 16, 2009:- The Securities...
Pyramid Saimira: SEBI Investigation
A couple of days ago, the media carried reports of SEBI having directed one of the promoters to make an open offer to the shareholders of Pyramid Saimira Theatres Limited at a price that is at a substantial premium to current market price. However, just a day later, SEBI put out a clarification that it had issued no such letter, which appears to have been forged. Sensing some foul play, SEBI has...
Buyback and Takeover Regulations
The issue of whether a buyback of shares will trigger an open offer under the Takeover Regulations has been the subject-matter of extensive discussion on this Blog. In addition, one of our guest contributors, Somasekhar Sundaresan, has a guest column in the Business Standard, which details the issues involved and makes some proposals for change. He states: “It is true that promoters in control of...
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