Substantial Acquisition of Shares or Voting Rights in and Acquisition of
Control Over a Listed Company -Part: I

Acquisition of fifteen percent or more of the shares or voting rights of any company (Regulation 10)

No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen percent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations.

Consolidation of holdings (Regulation 11)

1. No acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, 15 per cent or more but less than 75 per cent of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him to exercise more than 5% of the voting rights, in any financial year ending on 31st March, unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations.

2. No acquirer, who together with persons acting in concert with him has acquired , in accordance with the provisions of law, 75% of the shares or voting rights in a company, shall acquire either by himself or through persons acting in concert with him any additional shares or voting rights, unless such acquirer makes a public announcement to acquire shares in accordance with the regulations.

3. Notwithstanding anything anything contained in Regulations 10, 11 and 12, in case 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 another public announcement at the subsequent stage of further acquisition of shares or voting rights or control of the Public Sector Undertaking provided:-

   1. both the acquirer and the seller are the same at all the stages of acquisition, and

   2. disclosures regarding all the stages of acquisition, if any, are made in the letter of offer issued in terms of Regulation 18 and in the first public announcement.

Explanation:- For the purposes of Regulation 10 and Regulation 11, acquisition shall mean and include,-

1. Direct acquisition in a listed company to which the Regulations apply;

2. Indirect acquisition by virtue of acquisition of companies, whether listed or unlisted, whether in India or abroad.

Acquisition of control over a company (Regulation 12)

Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the Regulations.

Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a special resolution passed by the shareholders in a general meeting.

Provided further that for passing of the special resolution facility of voting through postal ballot as specified under the Companies (Passing of the Resolutions by Postal Ballot) Rules, 2001 shall also be provided.

Explanation: For the purposes of this Regulation, acquisition shall include direct or indirect acquisition of control of target company by virtue of acquisition of companies, whether listed or unlisted and whether in India or abroad

Appointment of a Merchant Banker (Regulation 13)

Before making any public announcement of offer referred to in Regulation 10 or Regulation 11 or Regulation 12, the acquirer shall appoint a merchant banker in Category-I holding a certificate of registration granted by the Board, who is not associate of or group of the acquirer or the target company.

Timing of the Public Announcement of Offer (Regulation 14)

1. The public announcement referred to in Regulation 10 or Regulation 11 shall be made by the merchant banker not later than four working days of entering into an agreement for acquisition of shares or voting rights or deciding to acquire shares or voting rights exceeding the respective percentage specified therein:

   Provided that in case of disinvestment of a Public Sector Undertaking, the public announcement shall be made by the merchant banker not later than 4 working days of the acquirer executing the Share Purchase Agreement or Shareholders Agreement with the Central Government or the State Government as the case may be for the acquisition of shares or voting rights exceeding the percentage of share holding referred to in Regulation 10 or Regulation 11 or the transfer of control over a target Public Sector Undertaking.

2. In case of an acquirer acquiring securities, including Global Depositories Receipts or American Depository Receipts which, when taken together with the voting rights, if any already held by him or persons acting in concert with him, would entitle him to voting rights, exceeding the percentage specified in Regulation 10 or Regulation 11, the public announcement referred to in sub-regulation (1) shall be made not later than four working days before he acquires voting rights on such securities upon conversion, or exercise of option, as the case may be.

3. The public announcement referred to in Regulation 12 shall be made by the merchant banker not later than four working days after any such change or changes are decided to be made as would result in the acquisition of control over the target company by the acquirer.

4. In case of indirect acquisition or change in control, a public announcement shall be made by the acquirer within three months of consummation of such acquisition or change in control or restructuring of the parent or the company holding shares of or control over the target company in India.

Public Announcement of Offer (Regulation 15)

1. The public announcement to be made under Regulations 10 or Regulation 11 or Regulation 12 shall be made in all editions of one English national daily with wide circulation, one Hindi national daily with wide circulation and a regional language daily with wide circulation at the place where the registered office of the target company is situated and at the place of the stock exchange where the shares of the target company are most frequently traded.

2. Simultaneously with publication of the public announcement in the newspaper in terms of sub-regulation (1), a copy of the public announcement shall be,

   1. submitted to the Board through the merchant banker,

   2. sent to all the stock exchanges on which the shares of the company are listed for being notified on the notice board,

   3. sent to the target company at its registered office for being placed before the Board of Directors of the company.

3. Simultaneous with the submission of the public announcement to the Board, the public announcement shall also be sent to all the stock exchanges on which the shares of the company are listed for being notified on the notice board, and to the target company at its registered office for being placed before the board of directors of the Company.

4. The offer under these Regulations shall be deemed to have been made on the date on which the public announcement has appeared in any of the newspapers referred to in sub-regulation (1).

Contents of the Public Announcement of Offer (Regulation 16)

The public announcement referred to in Regulations 10 or Regulation 11 or Regulation 12 shall contain the following particulars, namely :-

1. the paid up share capital of the target company, the number of fully paid up and partly paid up shares;

2. the total number and percentage of shares proposed to be acquired from the public, subject to a minimum as specified in sub-regulation (1) of Regulation 21;

3. the minimum offer price for each fully paid up or partly paid up share;

4. mode of payment of consideration;

5. the identity of the acquirer(s) and in case the acquirer is a company or companies, the identity of the promoters and, or the persons having control over such company(ies) and the group, if any, to which the company(ies) belong;

6. the existing holding, if any, of the acquirer in the shares of the target company, including holdings of persons acting in concert with him;

7. salient features of the agreement, if any, such as the date, the name of the seller, the price at which the shares are being acquired, the manner of payment of the consideration and the number and percentage of shares in respect of which he acquirer has entered into the agreement to acquire the shares or the consideration, monetary or otherwise, for the acquisition of control over the target company, as the case may be;

8. the highest and the average price paid by the acquirer or persons acting in concert with him for acquisition, if any, of shares of the target company made by him during the twelve month period prior to the date of public announcement;

9. Object and purpose of the acquisition of the shares and future plans, if any, of the acquirer for the target company, including disclosures whether the acquirer proposes to dispose of or otherwise encumber any assets of the target company in the succeeding two years, except in the ordinary course of business of the target company
   Provided that where the future plans are set out , the public announcement shall also set out how the acquirers propose to implement such future plans.
   Provided further that the acquirer shall not sell, dispose of or otherwise encumber any substantial asset of the target company except with the prior approval of the shareholders.

   (ixa) an undertaking that the acquirer shall not sell, dispose of or otherwise encumber any substantial asset of the target company except with the prior approval of the shareholders.

10. the `specified date' as mentioned in Regulation 19;

11. the date by which individual letters of offer would be posted to each of the shareholders;

12. the date of opening and closure of the offer and the manner in which and the date by which the acceptance or rejection of the offer would be communicated to the shareholders;

13. the date by which the payment of consideration would be made for the shares in respect of which the offer has been accepted;

14. disclosure to the effect that firm arrangement for financial resources required to implement the offer is already in place, including details regarding the sources of the funds whether domestic i.e from banks, financial institutions, or otherwise or foreign i.e., from Non-Resident Indians or otherwise.

15. provision for acceptance of the offer by person(s) who own the shares but are not the registered holders of such shares;

16. statutory approvals, if any, required to be obtained for the purpose of acquiring the shares under the Companies Act, 1956 (1 of 1956), the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969), The Foreign Exchange Regulation Act, 1973, (46 of 1973) and/or any other applicable laws;

17. approvals of banks or financial institutions required, if any; whether the offer is subject to a minimum level of acceptance from the shareholders; and

18. such other information as is essential for the shareholders to make an informed decision in regard to the offer.

Brochures, advertising material etc.(Regulation 17)

The public announcement of the offer or any other advertisement, circular, brochure, publicity material or letter of offer issued in relation to the acquisition of shares shall not contain any misleading information.

Submission of Letter of offer to the Board (Regulation 18)

1. Within fourteen days from the date of public announcement made under Regulation 10, Regulation 11 or Regulation 12 as the case may be, the acquirer shall, through its merchant banker, file with the Board, the draft of the letter of offer, containing disclosures as specified by the Board

2. The letter of offer shall be despatched to the shareholders not earlier than 21 days from its submission to the Board under sub-regulation (1).
   Provided that if, within 21 days from the date of submission of the letter of offer, the Board specifies changes, if any, in the letter of offer, (without being under any obligation to do so) the merchant banker and the acquirer shall carry out such changes before the letter of offer is despatched to the shareholders.
   Provided further that if the disclosures in the draft letter of offer are inadequate or the Board has received any complaint or has initiated any enquiry or investigation in respect of the public offer, the Board may call for revised letter of offer with or without rescheduling the date of opening or closing of the offer and may offer its comments to the revised letter of offer within seven working days of filing of such revised letter of offer.

3. The acquirer shall, along with the draft letter of offer referred to in sub-regulation (1), pay a fee of Rs. 50, 000/- to the Board, either by a banker's cheque or demand draft in favour of the Securities and Exchange Board of India, payable at Mumbai.

Specified date (Regulation 19)

The public announcement shall specify a date, which shall be the `specified date' for the purpose of determining the names of the shareholders to whom the letter of offer should be sent.
Provided that such specified date shall not be later than the thirtieth day from the date of the public announcement.