Documente Academic
Documente Profesional
Documente Cultură
By Payel Jain
Vinod Kothari & Company
To protect the investors, the Takeover Code has been codified by the Securities and
Exchange Board of India, the regulator of Securities Market, which requires the
promoters to give mandatory offer to the public to decide if they wish to continue to
be the shareholders of the company in the changed circumstances.
To fulfill the intent as stated above, the Code therefore ensures the following:
• Exit opportunity to the investors if they do not want to continue with the new
management.
• Full and truthful disclosure of all material information relating to the open
offer to enable the investors to take an informed decision.
• Ensuring the sufficiency of financial resources by the promoters for the
payment of acquisition price to the investors.
• Timely completion of takeover formalities.
Public offer refers to the exit opportunity given to the public to dilute their
shareholding in the Target Company if there is a substantial change in the
shareholding pattern as envisaged in the Code or if there is a change in control of the
Target Company. The acquirers are compulsorily required to make public offer to
acquire 20% of the shares or voting rights from public in cases where the Code is hit
which we will discuss in detail hereinbelow.
“control” includes
• the right to appoint majority of the directors, or
• to control the management or policy decisions exercisable by a person or
persons acting individually or in concert, directly or indirectly, including by
virtue of
o their shareholding or
o management rights or
o shareholders agreements or
o voting agreements or
o in any other manner.
“promoter” means—
Under
Regulation Event attracting requirement of PA
Regulation 7(1)
Event attracting Who shall Whom to What to
Compliance Time Limit disclose disclose disclose
On reaching
every stage of
On acquiring shres or shareholding,
voting rights entitling within 2 days to the target
the acquirer to hold of receipt of company and
together with shares intimation of the SE where
already held more than allotment or the shares of the
5%, 10%, 14%, 54% acquisition of Target Co. are His
and 74% shares shares Acquirer listed Shareholding
Regulation 7(1A)
Acquirer, purchase or
who has sale
acquired aggregating
shares or two percent
voting rights or more,
Within 2 days of a to the target alongwith
Purchase or sale of receipt of company company and the aggregate
aggregating two percent intimation of under sub- the SE where shareholding
or more of the share allotment or regulation(1) the shares of the after such
capital of the target acquisition of of regulation Target Co. are acquisition
company shares 11 listed or sale
Regulation 7(3)
the aggregate
number of
shares held
by each of
the persons
Within 7 days who have
of receipt of To all SE where given
Shares acquired in the information the shares of the disclosure to
manner under Reg 7(1) under Reg 7(1) Target company are the Target
& 7(1A) & 7(1A) Company listed Co
Yearly disclosures – Regulation 8
Regulation 8(1)
Event attracting Who shall Whom to What to
Compliance Time Limit disclose disclose disclose
Person
Within 21 days holding
from the more than
financial year 15 % shares his holdings
Yearly disclosure of ending March in any To the as on 31st
shareholding 31 company Company March
Regulation 8(2)
Within 21 days disclose the
from the number and
financial year % of shares
ending March or voting
31, as well as rights held
the record date by him and
of the promoter or by persons
company for every person acting in
the purposes of having concert with
Yearly disclosure of declaration of control over To the him, in the
shareholding dividend a company Company company
Regulation 8(3)
Changes in
shareholding
of person
holding 15 %
or more
shares;
Within 30 days holdings of
from the promoter &
financial year persons
ending March To all SE where having
Yearly disclosure of 31, as well as Listed the shares of the control over
shareholding the record date Company Co are listed the company
Exemptions under the Takeover Code:
Appointment of Before
Acquirer to start the Merchant Banker making PA
process by
Merchant Banker to
make PA Not later than 4
days of acquisition
SEBI
Copy of PA to be
Target Company
sent to
SEs where TC’s
shares are listed
Submission of draft
Within 14
letter of offer to Board
days of PA
along with fees
PA must be to acquirer
minimum 20 % of
voting capital