DISCLOSURES OF SHAREHOLDING AND
CONTROL UNDER SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS)
REGULATIONS 2011 – CHAPTER V
By
CS D HEM SENTHIL RAJ AND CS K VINOTH
Overview:
The intent behind
the disclosure regime is not only to ensure that the target company is not
taken by surprise but also to ensure that the price discovery in the market for
the shares of the target company takes place in an informed manner, where the
very fact of an interested acquirer increasing his holding would contribute to
the emergence of price at which sellers would be willing to sell their shares
in the market. Also, such price discovery has implications for the computation
of the minimum offer price in the look back period. While it is very clear what
percentage of the equity shares of a company are held by parties exceeding the
thresholds, it is not clear what that party’s effective economic interest in
the company actually is, since it includes instruments which while presently
not entitling the holder to voting rights, may, in future, lead to accrual of
shares/voting rights.
Important
Definitions:
Acquirer:
Acquirer means any
person who, directly or indirectly, acquires or agrees to acquire whether by
himself, or through, or with persons acting in concert with him, shares or
voting rights in, or control over a target company.
Acquisition:
Acquisition means,
directly or indirectly, acquiring or agreeing to acquire shares or voting
rights in, or control over a target company.
Persons acting
in concert (PAC’s):
A person with a
common objective or purpose of acquisition of shares or voting rights in, or
exercising control over a target company, pursuant to an agreement or
understanding, formal or informal, directly or indirectly co-operate for
acquisition of shares or voting rights in, or exercise of control over the
target company.
Deemed PAC’s:
i)
A company, its holding company,
subsidiary company and any company under the same management or control
ii) A
company its directors and any person entrusted with the management of the
company
iii) Directors
of companies referred to in items (i) & (ii) above and associates of such
directors.
iv) Promoters
and members of the promoter group
v)
Immediate relatives
vi) A
mutual fund, its sponsor, trustees, trustee company and asset management
company
vii) A
collective investment scheme and its collective investment management company,
trustees and trustee company.
viii) A
venture capital fund and its sponsor, trustees, trustee company and asset
management company
ix) A
foreign Institutional investor and its sub accounts
x)
A merchant banker and its client,
who is an acquirer
xi) A
portfolio manager and its client, who is an acquirer
xii) Banks,
financial advisors and stock brokers of the acquirer or of any company which is
a holding or subsidiary of the acquirer, and where the acquirer is an
individual, of the immediate relative of such individual.
xiii) An
investment company or fund and any person who has an interest in such
investment company or fund as a shareholder or unit holder having not less than
10%
of the paid up share capital of the investment company or unit capital of the fund, and any other investment company or fund in which such person or his associate holders not less than 10% of the paid up share capital of that investment company or unit capital of the fund.
of the paid up share capital of the investment company or unit capital of the fund, and any other investment company or fund in which such person or his associate holders not less than 10% of the paid up share capital of that investment company or unit capital of the fund.
Broader
Definition of Shares as per SEBI (SAST):
As per Regulation 31(2) the
following shall be regarded as shares:
1) Equity
Shares
2) Convertible
Debentures
3) Convertible
Warrants
Types
of Disclosures:
1) Disclosure
of Acquisition and Disposal –
Regulation 29
2) Continual
Disclosures –
Regulation 30
3) Disclosure
of Encumbered Shares –
Regulation 31
Persons
who are obliged to make such disclosures:
Regulation 28 of SEBI (SAST)
states that the following persons are obliged to make such disclosures as
mentioned above:
1) Any
Acquirer of the Target Company.
2) Promoter
of the Target Company.
3) Persons
Acting in Concert (PAC’s) of the Target Company.
Disclosure
of acquisition and disposal (Regulation 29):
Particulars
|
Disclosure
by
|
Disclosure
to
|
Time
Limit
|
Acquirer
together with PAC acquires 5% or more
in aggregate of the shares or voting rights of the target company (together
with the existing shares or voting rights held by them)
[Regulation
29(1)]
|
Acquirer
(As per format prescribed under
regulation 29(1) & of SEBI (SAST) Regulations 2011).
|
Stock
Exchange
&
Target Company
|
Within
2 working days of the receipt of intimation of allotment of shares or
acquisition of shares or voting rights.
|
Acquirer
together with PAC holding 5% or more
in a target company shall disclose every acquisition or disposal of shares
representing 2% or more of the
shares or voting rights.
[Regulation 29(2)] |
Stock
Exchange
&
Target
Company
|
Within
2 working days of the receipt of intimation of allotment of shares or disposal
or acquisition of shares or voting rights.
|
Note:
1) Shares
taken by way of encumbrance shall be treated as an “acquisition”.
2) Shares
given upon release of encumbrance shall be treated as a “disposal”.
The requirement as
listed above shall not apply to a scheduled commercial bank or public financial
institution as pledgee in connection with a pledge of shares for securing
indebtness in the ordinary course of business.
Continual
Disclosures (Regulation 30):
Particulars
|
Disclosure by
|
Disclosure to
|
Time Limit
|
|
Every
Person together with PAC holding shares or voting rights aggregating to 25% or more of the voting rights in a
target company.
[Regulation
30(1)]
|
Every Person together with PAC
(As per format prescribed under
regulation 30(1) of SEBI (SAST) Regulations 2011) as on March 31 of every
year.
|
Stock
Exchange
&
Target
Company
|
Within 7 working days from the
end of each financial year.
|
|
A Promoter together with PAC
holding shares or voting rights in a target company shall disclose their
aggregate shareholding.
[Regulation
30(2)]
|
Promoter together with PAC
(As per format prescribed under
regulation 30(2) & of SEBI (SAST) Regulations 2011) as on March 31 of
every year.
|
Stock Exchange
&
Target Company
|
Within 7 working
days from the end of each financial year.
|
|
Disclosure of Encumbered Shares (Regulation 31(1)):
Particulars
|
Disclosure by
|
Disclosure to
|
Time Limit
|
A Promoter shall disclose
details of shares in such target company encumbered by him or by PAC’s with
him
[Regulation
31(1)]
|
Promoter
(As per format prescribed under
regulation 31(1) of SEBI (SAST) Regulations 2011).
|
Stock Exchange
&
Target Company
|
Within 7 working days from the creation
or invocation or release of encumbrance as the case may be.
|
A
Promoter shall disclose details of invocation of such encumbrance or release
of such encumbrance of shares.
[Regulation 31(1)]
|
Promoter
(As per format prescribed under
regulation 31(2) of SEBI (SAST) Regulations 2011).
|
Stock Exchange
&
Target Company
|
Within 7 working days from the
creation or invocation or release of encumbrance as the case may be.
|
By
CS K Vinoth
CS D Hem Senthil Raj
Blog : http://csthenewera.blogspot.in/
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