Documente Academic
Documente Profesional
Documente Cultură
Code
Presented By:
Harkesh Bansal(05)
Deep Shikha(08)
Siddharth Iyer(10)
Jaimin Patwa(19)
Jharna Tinani(26)
February 19, 2016
Evolution of TOC
February 19, 2
Evolution...
Apr-2007
SEBI amended Code
Post - 1994
Oct - 2002
Few amendments
as per Bhagwati
Committees reco.
Feb - 1997
New Takeover Code
(Bhagwati
Committee)
Nov - 1994
SEBI Takeover
Code
Nov 1990
Clause 40(A) & 40(B)
of Listing Agreement
Pre
Pre --1990
1990
Clause
Clause 40
40 of
ofListing
Listing
Agreement
Agreement
February 19, 2
Pre - 1990
Indian M&A
Amalgamations
Merger
Acquisitions
Asset
Purchase
De-merger
Slump
Sale
February 19, 2
Stock
Purchase
Itemized
Sale
The Takeover
Code, 1997
Objectives
Shareholders:
Equality of treatment
Adequate opportunity
Protection of interests
Acquirers:
Adequate disclosure
Disclosure to all
Disclosure within stipulated time limits
Managements:
Ensure flow of information
No unnecessary action during the offer period
February 19, 2
February 19, 2
Chapter 2
Chapter 3
Chapter 4
Chapter 5
February 19, 2
Definitions
February 19, 2
Key Definitions...
Acquirer
Any person who, directly or indirectly, acquires or agrees to acquire
shares or voting rights in the target company, or acquires or agrees to
acquire control over the target company, either by himself or with any
person acting in concert with the acquirer
Shares
Means shares in the share capital of a company carrying voting rights and
includes any security which would entitle the holder to receive shares with
voting rights [but shall not include preference shares]
Control
Right to appoint majority of directors or Right to control management
decisions or Right to take policy decisions exercisable by PAC, directly or
indirectly, by virtue of their shareholding or management rights or SHA or
voting agreements or in any other manner
February 19, 2
Key Definitions...
Persons Acting in Concert (PAC)
a company, its holding or subsidiary company or a company under the same management and their
directors or persons responsible for management of funds
Banks with financial advisors, stock brokers of acquirer, a company which is a holding / subsidiary or
relative of the acquirer
February 19, 2
10
Key Definitions...
Promoter shall include
Person/s
Deemed to be a promoter
Individual spouse, parents, brothers, sisters or children
Corporate:
A financial institution, scheduled commercial bank, FII or VCF shall not be deemed to
be a promoter by virtue of shareholding
February 19, 2
11
Key Definitions...
Offer period
Period between the date of entering into MOU or the PA, as the case may be
and the date of completion of offer formalities relating to the offer made
under these regulations
Public shareholding
Means shareholding held by persons other than promoters as defined
February 19, 2
12
Disclosures
February 19, 2
13
Disclosures
Periodical disclosures
Disclosures by acquirer to the company / stock exchange within 2 working
days
February 19, 2
14
Open Offers
February 19, 2
15
Trigger points.
Substantial acquisition
Consolidation of Holdings
15% to 55% - Open offer triggered for acquisition beyond 5% per year
February 19, 2
16
Regulation 11
Regulation 12
Substantial Acquisition of
Shares
Consolidation of
Holdings
Acquisition of Control
February 19, 2
Want to exceed
creeping limit of 5%
within a financial year
Offer needs to be
made if acquirer
wants to exceed 55%
shareholding in Target
17
Exemptions
February 19, 2
18
Acquisition pursuant to a scheme framed under section 18 of Sick Industrial Companies Act
(SICA) 1985
February 19, 2
19
Public Announcement
an Acquirer may also make an offer for less than 20% of shares of
target company in case the acquirer is already holding 75%
February 19, 2
20
Public Announcement
The other disclosures in this announcement would inter alia include:
February 19, 2
21
February 19, 2
22
An acquirer may make a conditional offer which may be less than 20%
of minimum offer size (S&P / Crisil)
February 19, 2
23
February 19, 2
24
February 19, 2
25
Negotiated price
Highest of average of weekly highs and low of the last 26 weeks or daily
highs and low of last 2 weeks
Negotiated price
February 19, 2
26
Cash; or
Discharge of consideration
February 19, 2
27
Timelines
MOU
Within 4
days
DATE OF PUBLIC ANNOUNCEMENT
Within
14 days
Filing of
Letter of
Offer with
the SEBI
Within
45 days
Offer to reach
the
shareholders
Within
55 days
Within
7 days
Offer to
open
Within 20 days
February 19, 2
Within
15 days of
Offer
Closure
Offer to
close
Open a
Special A/c
for Payment
Dispatch
consideration to
shareholders
28
Examples
February 19, 2
29
Example Group
F co1
Public,FIs etc
100%
51%
F co2
Indian
listed co
49%
February 19, 2
30
Minimum offer price as per the Takeover Code is determined at Rs. 500 per share
ISSUE:
CALCULATION:
Non compete fees paid to person(s) other than the Target Company
Rs.150
(25% of 500)
Rs.125
(150 125)
Rs. 25
(500 + 25)
Rs.525
February 19, 2
(500 + 150)
Rs.650
Rs.525
31
X Ltd.
A co
Outside India
Mr. B
India
What should A co and B do to ensure compliance with the Takeover Code? When
should these steps be taken?
Both A co and Mr. B will be required to make relevant disclosures.
Calculation to be based on the expanded capital presuming full conversion into shares.
Such disclosure shall be made at the time of conversion of such instruments into
shares carrying voting rights
Regulations 10, 11 & 12 applicable only at the time of conversion
into shares carrying voting rights
February 19, 2
32
Thank you
February 19, 2
33