The question of what constitutes “control” under the SEBI Takeover Regulations of 2011 is a vexed one. This is because an acquirer could acquire less than the mandatory offer threshold of 25% and still be required to make an offer if it is said to be in control of the target company. Control is defined in an inclusive manner and could result in some amount of subjectivity in its determination...
Miscellaneous
1. Exemption from Takeover Regulations for Gift of Shares to Family Trust SEBI has granted an exemption to an acquirer from making an open offer under the SEBI Takeover Regulations in the case involving Gujarat Organics Limited (the company). In that case, the promoter Mr. Ashwin S. Dani, owns 71.15% shares in the company, and proposes to transfer...
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...
Special Circumstances for Exemption from Takeover Offers
In the last few days, SEBI issued two exemption orders and one informal guidance based on requests made by acquirers not to be obligated to make mandatory open offers under the SEBI Takeover Regulations due to the existence of special circumstances. This post briefly discusses each of these situations and the rationale for SEBI’s views. Forfeiture of Shares In an application in the case of Prima...
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...
SEBI Adjudication Order: “Persons Acting in Concert”
Nearly three years ago, we had discussed SEBI’s initial order relating to trading of shares in Bank of Rajasthan (BoR). Last week, the adjudicating officer of SEBI has passed an order imposing a hefty penalty on 118 entities that traded in shares of for violation of the provisions of the SEBI Takeover Regulations and the SEBI Regulations on Fraudulent and Unfair Trade Practices. The facts of the...
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...
SEBI’s Recent Securities Markets Announcements
Last week, SEBI took certain decisions in the form of minor reforms to the securities markets, both primary and secondary. As part of a process that began nearly 3 years ago, SEBI has further liberalized the process for dilution of promoter shareholding in listed companies, since a deadline of June 2013 has been set to ensure minimum level of public shareholding in listed companies. This time...
Mandatory Offers and Creeping Acquisitions
The Securities and Exchange Board of India (SEBI) passed an order under the SEBI Takeover Regulations of 1997 (that existed prior to October 2011) in relation to the shares of Khaitan Electricals Limited (the Target Company). In this order, the SEBI whole time member directed the promoters of the company to make an open offer to the other shareholders on account of certain acquisitions of shares...
Should Government Companies Be Exempt From the Takeover Regulations?
Today’s Business Standard carries a report indicating that SEBI is in the process of considering a general exemption to the Government from making a mandatory open offer under SEBI’s Takeover Regulations 2011. This comes in the wake of two specific exemptions granted by SEBI this year in the case of IDBI Bank and IFCI whereby the Government was given special dispensation from making an open offer...
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