Last week, an adjudicating officer of SEBI issued an order imposing an aggregate penalty of Rs. 50 lakhs (Rs. 5 million) on certain promoter entities of Hindustan Unilever Limited (HUL) for delayed filing of disclosures regarding the shareholding of such entities under the SEBI takeover regulations. It came to SEBI’s notice that there were delayed filings of shareholding disclosures for certain...
Takeover and Compliance with Minimum Public Shareholding
A recent informal guidance issued by the Securities and Exchange Board of India deals with the questions pertaining to the intersection of the SEBI Takeover Regulations of 2011 and the process of complying with the minimum public shareholding in listed companies. In the case involving R Systems International Limited, the acquirer made an open offer and acquired certain shares of the target...
SAT on Acquisitions by Persons Acting in Concert
Background In a recent decision, the Securities Appellate Tribunal (SAT) ruled on the acquisition of shares by a person acting in concert (PAC) with other shareholders, and whether an increase in the individual shareholding of that person beyond 15% triggered a mandatory open offer requirement under the erstwhile SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the 1997...
Takeover Regulations: Intention to Acquire
[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] In an order passed by the SEBI, Adjudicating Officer in the context of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations (SEBI Takeover Regulations), the Adjudicating Officer relying upon a decision of the...
SPEL Semiconductor: SEBI’s Exemption from Open Offer
[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] SEBI’s Whole Time Member has passed an order dated 6 September 2013 granting an exemption to Natronix Semiconductor Technology Private Limited (Acquirer – a company incorporated in Singapore) from making an open offer [regulation 3(1)...
FDI and Acquisition of Shares on the Stock Exchange
Under the prevailing regime on foreign direct investment (FDI) in India, only certain types of investors are entitled to buy and sell shares on the stock exchange through a registered broker. They are foreign institutional investors (FIIs), qualified foreign investors (QFIs) and non-resident Indians (NRIs). All other types of non-resident investors may either buy shares from the company in a new...
FDI and the “Control” Question
Eons ago, an English judge remarked that “public policy” is an unruly horse and once you get astride it you will never know where it will carry you. Lately, corporate India has been left to contend with another unruly horse in the form of the concept of “control”, whose scope and meaning have been stretched in different directions without the requisite precision, often altering according to time...
Takeover Exemption: Inter Se Transfer Among Promoters
A few months ago, we had discussed certain orders passed by SEBI that exempted parties from mandatory open offers in certain specific circumstances. Recently, SEBI passed an exemption order in a transfer involving the shares of GMR Infrastructure Limited (the target company). In this case, 70.3% of the shares of the target company are held by GMR Holdings Private Limited (GHPL). GHPL is in turn...
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...
Supreme Court on Withdrawal of a Takeover Offer
Background The Supreme Court earlier this month issued its decision on the takeover offer by Nirma Industries Limited to the shareholders of Shree Rama Multi Tech Limited (SRMTL). The court concurred with the view of the Securities Appellate Tribunal (SAT) and the Securities and Exchange Board of India (SEBI) in disallowing the withdrawal of the offer by Nirma. In a column appearing on CNBC’s The...
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