[The following guest post is contributed by Supreme Waskar, who is a corporate lawyer] In the backdrop of ambiguity and concerns in relation to acquisition of ‘control’ of a listed target company, the Securities and Exchange Board of India (“SEBI”) has initiated a consultation process by way of its discussion paper dated March 14, 2016 (“Discussion Paper”). Existing scenario The term control...
Individual Triggers for Takeover Offers
[The following guest post is contributed by Jyoti Srivastava, who is a Manager at Vinod Kothari & Co.] The Securities and Exchange Board of India (SEBI) has framed regulations providing for the acquisition of shares and takeover of listed companies known as ‘Takeover Code’ or SEBI (Substantial Acquisition of Shares) Regulations, 2011 (‘SAST Regulations, 2011’). The provisions of the SAST...
SEBI Board Meeting: Wilful Defaulters, Control, etc.
The meeting of SEBI’s board held today has resulted in some crucial decisions. An important one relates to SEBI’s new approach towards reconsidering the definition of “control” under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. This is because an acquirer who acquires control without obtaining the minimum number of shares (i.e. 25% voting rights) could be required...
Change in Shareholding of Individual Promoter Triggers Takeover Code
[The following guest post is contributed by Supreme Waskar, who is a corporate lawyer] In its interpretative letter dated March 01, 2016 under the SEBI (Informal Guidance) Scheme, 2003, in the matter of Capital Trust Limited (“CTL”), SEBI clarified the provisions of regulation 3(3) of the SEBI (Substantial Acquisition of Shares and Takeovers), Regulations, 2011 (“Takeover Code”). Facts...
Papers on Takeover Regulation
I have posted two papers on SSRN, the titles and abstracts of which are as follows: 1. “Comparative Takeover Regulation and the Concept of ‘Control’” The mandatory bid rule (MBR), one of the basic tenets of takeover regulation, obligates an acquirer who obtains ‘control’ over a target company to make an offer to acquire the shares of the...
Supreme Court on Takeover Offer Price
Under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations (both under the current version of 2011 and previous version of 1997), takeover offers are required to be made at a minimum offer price that is based on the historical market price over a specified period of time and also on other acquisitions made by the acquirer of persons acting in concert (PACs) during a similar...
SEBI Adjudication Order: Disclosure of Encumbrances Over Shares
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “SAST Regulations”) contains provisions in Reg. 31 that requires promoters of a company to disclose to the company and the stock exchanges the details of shares encumbered by them and also any invocation or release of encumbrance. The genesis of the requirement to disclose pledge and other encumbrances arose after...
SEBI Consultation: Forfeiture of Shares and Impact on Takeover Regulations
SEBI has issued a Discussion Paper on “Review of policy relating to forfeiture of partly paid-up shares – Amendments to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011”. The paper opens with references to partly-paid shares and forfeiture of unpaid capital as provided under the Companies Act, 2013. Essentially, in case of partly paid shares, the holder can exercise voting...
Lenders Empowered to Take Control over Distressed Firms
The Reserve Bank of India (RBI) yesterday conferred a significant power to banks to acquire control of borrower companies which fail to achieve prescribed milestones as part of their restructuring. Under this arrangement, the Joint Lenders’ Forum (or JLF, formed for the purpose of addressing distressed assets) may “convert the whole or part of the loan and interest outstanding into equity shares...
Voting Agreements and Takeover Regulations
Earlier this week, SEBI issued an informal guidance based on a request by the promoters of Cipla Limited on the implications of voting agreements under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “Takeover Regulations”). Background; Facts The brief facts are that Dr. Y.K. Hamied and his family members control a significant stake in Cipla. Historically, all...
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