INDIAN
TAKEOVERS
Meaning Of Acqusition:
When an “acquirer” takes over the
control of the “target company”, it
is termed as takeover. When an
acquirer acquires “substantial quantity
of shares or voting rights” of the Target
Company, it results into substantial
acquisition of shares.
Types of Takeover
Friendly Takeover
Hostile Takeover
Bailout Takeover
REGULATION 6
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It states that any person holding at the time
of commencement 5% or more of the
Shareholding must intimate to the Company
within 2 Months of date of notification and
the Company must intimate such holding to
stock exchange where the Companies
shares are listed within 3 months of the date
of notification. This is also applicable on the
Promoters of the Company.
Regulation 7
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Any Acquirer who acquires shares or the Voting rights which would
entitle him to More than 5% or 10% or 15% or 54% or 74% must
disclose within four days to the Company and Stock Exchange
where shares are listed. The four days will be from 1) Date of
receipt of Intimation 2) The acquisition of shares as the case may
be.
Where the Acquirer has acquired the Shares together with persons
acting in concert shall disclose purchase or sale aggregating to 2%
or more of the share capital shall within four days disclose to
Company and stock exchange.
The stock exchange must display information received on trading
screen , the notice board and at website with 7 days of receipt of
Information
The Company whose share have been acquired in manner stated
above must intimate such information to Stock exchange within
7days of Receipt of information.
Regulation 8 For continual
disclosure:
Every person who holds more than 15% shares or
voting rights in any company shall within 21days from
the end of Year (31st March.) must within 21 days
discloses to the Company about such holding. The
promoter is required to disclose not only at the end
of financial year but also the record date for purpose
of declaration of Dividend.
 Every Company whose shares are listed on the stock
exchange shall with in 30 days from the end of
financial year or from the Record date for dividend
must intimate such holding of shares to stock
exchange.
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Regulation 9: Power to call for
information
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The stock exchange and the Company
shall submit information relating to
Regulation 6,7 and 8 to SEBI as and when
required by the Board
Regulation 10: Acquisition of 10% or
more shares by the Acquirer
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No acquirer Shall acquire which when
acquire in single or in persons acting in
concert with him entitle such acquirer to
exercise 10% or more of the Voting rights in
a company unless acquirer makes a public
announcement. This is not required where
such acquisition is on a right share basis and
such acquisition does not result in holding
more than 55% of the voting rights
Regulation 11 Consolidation of
Shares
No acquirer shall acquire additional shares entitling him to
exercise more than 10% voting rights along with the voting
rights he already has in any financial year unless public
announcement is made for such acqusition
 No acquirer who holds 55% or more but less than 75% shall
acquire either by himself or through the persons acting in
concert unless public announcement for same has been
made.
 Where the case involved is of disinvestment of a public
sector undertaking an acquirer who together with persons
acting in concert with him has made a public announcement
shall not be required to make further announcement for
further acquisition of shares
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Regulation 12 Acquisition of
Control over the Company
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Control on target company cannot
cannot be acquired unless public
announcement for same has been made.
Regulation 13 : Appointment of
Merchant Banker
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Before making public announcement for
acquiring shares under regulation 10,11
and 12 an acquirer must appoint
Merchant Banker holding a certificate of
registration granted by Board and
merchant banker must not be associated
with acquirer or group of acquirer
Regulation 14: Timing of Public
Announcement of Offer
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The Public announcement shall be made
by the merchant banker within four
working days of entering into agreement
for acquisition of shares exceeding the
prescribed limits.
Regulation 15: Public announcement
of offer
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The public announcement under reg 10,11 and 12
must be made in all editions one English national
daily, one Hindi national daily and regional
language where the registered office of the target
company is located and at the place where the
shares are frequently traded.
The copy of same must be submitted to Board
through the merchant banker
Sent to all stock exchange where the shares of
the companies are listed
Sent to target company at its registered office
Regulation 16 Contents of public
announcement of offer
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Paid up share capital of the target company, number of fully paid up and
partly paid up shares
Percentage of shares proposed to be acquired
Minimum offer price for each share
Identity of persons having control over such company
Existing shareholding of acquirer
Existing shareholding of merchant banker in target company
Highest and average price paid by acquirer or persons acting in concert
during 12 months preceding to date of public announcement
Object and purpose of acquisition
Specified date as mentioned in Regulation 19
Date by which the individual letters of offer would be posted to each of
the shareholder
Date of opening and closure of offer
Date by which the payment of consideration would be made for share
Regulation 17: Brochures,
advertising material
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The public announcement must not
contain any misleading information
Regulation 18: Submission of letter
of offer to the Board
Within 14 days from the date of public
announcement acquirer shall through the
merchant banker file with the Board draft
of letter of offer which must be submitted
to shareholders within 21days from the
date of its submission to Board
 Fees to be paid along with submission to
Board depending on the issue size
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Regulation 19: Specified date
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The public announcement shall specify the
date for determining the names of
shareholders to whom the letter of offer
should be sent. The specified date cannot
be later than 30th day from the date of
public announcement
Regulation 20: Offer Price
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Where the shares of the Company are frequently traded: The minimum offer
price will be the highest of the following:
The negotiated price as per the agreement
The highest of the price paid by the acquirer or persons acting in concert with him for
any acquisition including by way of allotment or right issue during the 26 weeks period
prior to date of public announcement
The price paid by the acquirer under the preferential allotment to him or the person
acting in concert at any time during the 12 months period up to the date of closure of
offer
The average of the weekly high and low of the closing prices of the shares of the target
company as quoted on the stock exchange during the 26 weeks preceding to the date of
public announcement.
When the shares of the company are not frequently traded: The minimum offer
price will be highest of the following:
The first three points will be same as if the shares are frequently traded.
The fourth point will be : price determined taking into consideration the factors like: Net
profit of the Company, Earning per share , book value of shares of the target company.
Regulation 21: Minimum number of
shares acquired
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The public offer made by the acquirer to
the shareholders of the target company
shall be for minimum 20% of the voting
capital of the Company
Regulation 22,23 and 24
These three regulations deals with:
 Obligation of Acquirer (22)
 Obligation of Board of Directors of the
target company.(23)
 Obligation of Merchant Banker(24)
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Regulation 25: Competitive Bid
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Any person, other than the acquirer who has
made the first public announcement , can
make a public announcement within 21 days
from the date of first public announcement.
Any competitive offer shall be for such
number of shares which when taken
together with the shares held by him along
with person acting in concert shall be at
least equal to or more than holding of first
bidder.
Regulation 26: Revision of offer
The acquirer can at any time up to 7
working days prior to date of closure of
offer. The revisions can be in respect of
following:
 Changes in original public announcement in
all newspapers where the original public
announcement was made
 Increasing the value of Escrow account
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Regulation 27: Withdrawal of offer
No public offer can be withdrawn except under
the following circumstances:
 The statutory approval(s) required have been
refused
 The sole acquirer being a natural person has died
• Withdrawal must be subject to:
 Publish about the withdrawal in the newspapers
in which the offer for public announcement was
made
 Intimate to stock exchange, Board and the target
company about such withdrawal
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Regulation 28: Provision of Escrow
account:
The acquirer must deposit in escrow account
such amount as security for performance of his
obligation. Amount of Escrow:
 Not subject to minimum level of acceptance:
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Up to 100
Crores: 25 %
 Subject
Upto 100 crores : 25%
and 10% thereafter
to Minimum level of acceptance of 20%
than 50% of the consideration will be deposited.
Regulation 29: Payment of
consideration
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Amount of such sum payable must be
deposited within 7 days from the closure
of offer with a Banker to an issue
registered with the Board together with
90% of the amount lying in escrow
account
TULSI DARYANANI