ACQUISITION OF SHARES OR VOTING RIGHTS PURSUANT TO INTER-SE TRANSFER AMONG
QUALIFYING PARTIES UNDER SEBI(SUBSTANTIAL
ACQUISITION OF SHARES AND TAKEOVER) REGULATIONS, 2011
OVERVIEW:
General
Exemption from making an open offer:
According to Regulation 10(1) (a),
acquisition pursuant to inter se transfer of shares among the qualifying
parties are exempted from the obligation to make an open offer under regulation
3 and regulation 4.
Who
are Qualifying Parties?
The qualifying parties are:
i)
Immediate relatives;
ii) Persons
named as promoters in the shareholding pattern filed by the target company in
terms of the listing agreement or these regulations for not less than three
years prior to the proposed acquisition;
iii) A
company, its subsidiaries, its holding company, other subsidiaries of such
holding company, persons holding not less than 50% of the equity shares of such
company, other companies in which such persons hold not less than 50% of the
equity shares, and their subsidiaries subject to control over such qualifying
parties being exclusively held by the same persons.
iv) PACs
for not less than 3 years prior to the proposed acquisition, and disclosed as
such pursuant to filings under the listing agreement.
v) Shareholders
of a target company who have been PACs for a period of not less than 3 years
prior to the proposed acquisition and are disclosed as such pursuant to filings
under the listing agreement, and any company in which the entire equity share
capital is owned by such shareholders in the same proportion as their holding
in the target company without any differential entitlement to exercise voting
rights in such company.
Conditions
to be satisfied for availing the above general exemption:
a) Acquirer
to give prior notice of proposed acquisition (at least 4 working days prior to
proposed acquisition) to stock exchanges
where shares of the target company are listed (Regulation 10(5)).
b) If
the shares of the target company are frequently traded, the acquisition price
per share shall not be higher by more than 25% of the Volume Weighted Average
Price (VWAMP) for a period of 60 trading days preceding the date of issuance of
notice to stock exchanges as per (a) above, as traded on the stock exchange
where the maximum volume of trading in shares of the target company are
recorded during such period.
If
the shares of the target company are infrequently traded, the acquisition price
shall not be higher by more than 25% of the price as per regulation 8(2)(c).
c) The
transferor and the transferee shall have complied with applicable disclosure
requirements set out in chapter V.
What
Regulations 8(2)(c) says:
In the case of direct acquisition
of share or voting rights in, or control over the target company, and indirect
acquisition of shares or voting rights in, or control over the target company
where the parameters referred to in sub-regulation (2) of regulation 5 are met,
the offer price shall be:
(c)
The highest price paid or payable for any acquisition, whether by the acquirer
or by any person acting in concert with him during the twenty six weeks
immediately preceding the date of public announcement.
Rationale
for Exemption of Inter-se Transfers:
The rationale for exempting inter
se transfers among qualifying parties is spelt out by TRAC as under:
“Acquisitions arising out of
inter se transfer of shares among qualifying parties as specified under the
Regulations would be exempt from making an open offer. The nature and type of
such qualifying parties has been spelt out with the underlying principle being
that such transfers do not represent a typical acquisition carrying an economic
value, which ought to result in providing an exit opportunity to all
shareholders, The only circumstances where this principle has been deviated
from is to permit transfer between co-promoters or persons acting in concert,
who have been disclosed as such for at least three years, and that too only if
the premium being paid to the exiting party is less than 25% of the VWAP over
the 12 weeks period and subject to the parties having complied with all their
disclosure obligations.”
PROCEDURAL
CHECKLIST FOR ACQUISITION OF SHARES/VOTING RIGHTS THROUGH INTER-SE TRANSFER:
|
Particulars
|
Disclosure by
|
Disclosure to
|
Timeline
|
|
|
1
|
Disclosure
under regulation 10(5) – Intimation to Stock Exchanges in respect of
acquisition under Regulation 10(1)(a) of SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011
|
Promoter
(Acquirer)
|
Stock
Exchange
|
Intimation
Disclosure to be filed with SE’s with at least 4 working days prior to the
date of proposed acquisition.
|
|
2
|
The
Delivery Instruction Slip duly signed by the seller to be submitted to the
Depository Participant for the purpose of effecting the transfer of shares.
|
Promoter
(Seller)
|
-NA-
|
On
or after the 5th day of Notice to SE’s.
|
|
3
|
Disclosures
under Regulation 10(6) – Report to Stock Exchanges in respect of any
acquisition made in reliance upon exemption provided for in Regulation 10 of
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
|
Promoter
(Acquirer)
|
Stock
Exchange
|
To
be filed with SE’s within 4 working days from the date of acquisition of
shares/voting rights.
|
|
4
|
Disclosure
under Regulation 29(1) - 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)
|
Acquirer
|
Stock
Exchange
&
Target
Company
|
Within
2 working days of the receipt of intimation of allotment of shares or acquisition
of shares or voting rights.
|
|
5
|
Disclosure
under Regulation 29(2) - 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.
|
Acquirer/Seller
|
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 as the case may be.
|
|
6
|
Disclosure
under Regulation 13(4) of SEBI Prohibition of Insider Trading Regulations
1992 - For Change in Shareholding or voting rights held by Director or
Officer and his dependents or Promoter or Person who is part of Promoter
Group of a listed company.
|
Promoter/Director/
Officer/Substantial
Shareholder(s)
|
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 as the case may be.
|
|
7
|
Disclosure
under Regulation 13(6) of SEBI Prohibition of Insider Trading Regulations
1992 - For Change in Shareholding or voting rights held by Director or
Officer and his dependents or Promoter or Person who is part of Promoter
Group of a listed company.
|
Target
Company
|
Stock
Exchange
|
Within
2 working days of the receipt of information received under sub regulations
(4) of Regulation 13 of SEBI (PIT) 1992.
|
|
8
|
Disclosure
under Section 93 of Companies Act, 2013 and Rule.13 of The Companies
(Management and Administration) Rules, 2014.
|
Target
Company
|
Registrar
of Companies
|
Within
15 days of such change in Form No. MGT 10.
|
BY
CS
K VINOTH
CS
D HEM SENTHIL RAJ
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