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

Competitive Bid ( Regulation 25 )

1. Any person, other than the acquirer who has made the first public announcement, who is desirous of making any offer, shall, within 21 days of the public announcement of the first offer, make a public announcement of his offer for acquisition of the shares of the same target company.

Explanation: An offer made under sub-regulation (1) shall be deemed to be a competitive bid.

2. No public announcement for an offer or competitive bid shall be made after 21 days from the date of public announcement of the first offer.

2. A)  No public announcement for a competitive bid shall be made after an acquirer has already made the public announcement under the proviso to sub-regulation (1) of Regulation 14 pursuant to entering into a Share Purchase or Shareholders Agreement with the Central Government or the State Government as the case may be], for acquisition of shares or voting rights or control of a Public Sector Undertaking

3. Any competitive offer by an acquirer shall be for such number of shares which, when taken together with shares held by him along with persons acting in concert with him, shall be at least equal to the holding of the first bidder including the number of shares for which the present offer by the first bidder has been made

4. Upon the public announcement of a competitive bid or bids, the acquirer(s) who had made the public announcement(s) of the earlier offer(s), shall have the option to 76[make an announcement revising the offer]. Provided that if no such announcement is made within fourteen days of the announcement of the competitive bid(s), the earlier offer(s) on the original terms shall continue to be valid and binding on the acquirer(s) who had made the offer(s) except that the date of closing of the offer shall stand extended to the date of closure of the public offer under the last subsisting competitive bid.

5. The provisions of these Regulations shall mutatis-mutandis apply to the competitive bid(s) made under sub-regulation (1).

6. The acquirers who have made the public announcement of offer(s) including the public announcement of competitive bid(s) shall have the option to make upward revisions in his offer(s), in respect to the price and the number of shares to be acquired, at any time upto seven working days prior to the date of closure of the offer:

   Provided that the acquirer shall not have the option to change any other terms and conditions of their offer except the mode of payment following an upward revision in offer

   Provided further that any such upward revision shall be made only upon the acquirer, -

   1. making a public announcement in respect of such changes or amendments in all the newspapers in which the original public announcement was made;

   2. simultaneously with the issue of public announcement referred in clause (a), informing the Board, all the stock exchanges on which the shares of the company are listed, and the target company at its registered office;

   3. increasing the value of the escrow account as provided under sub-regulation (9) of Regulation 28.

7. Where there is a competitive bid, the date of closure of the original bid as also the date of closure of all the subsequent competitive bids shall be the date of closure of public offer under the last subsisting competitive bid and the public offers under all the subsisting bids shall close on the same date.

Irrespective of whether or not there is a competitive bid, the acquirer who has made the public announcement of offer, may make upward revisions in his offer in respect to the price and the number of shares to be acquired, at anytime upto seven working days prior to the date of the closure of the offer.

Provided that any such upward revision of offer shall be made only upon the acquirer -

1. making a public announcement in respect of such changes or amendments in all the newspapers in which the original public announcement was made;

2. simultaneously with the issue of such public announcement, informing the Board, all the stock exchanges on which the shares of the company are listed, and the target company at its registered office.

3. increasing the value of the escrow account as provided under sub-regulation (9) of Regulation 28.

1. No public offer, once made, shall be withdrawn except under the following circumstances:-

   1. Deleted

   2. the statutory approval(s) required have been refused;

   3. the sole acquirer, being a natural person, has died;

   4. such circumstances as in the opinion of the Board merits withdrawal.

2. In the event of withdrawal of the offer under any of the circumstances specified under sub-regulation (1), the acquirer or the merchant banker shall :

   1. make a public announcement in the same newspapers in which the public announcement of offer was published, indicating reasons for withdrawal of the offer.

   2. simultaneously with the issue of such public announcement, inform -

      1. the Board;

      2. all the stock exchanges on which the shares of the company are listed; and

      3. the target company at its registered office.

1. The acquirer shall as and by way of security for performance of his obligations under the Regulations, deposit in an escrow account such sum as specified in sub-regulation (2).

2. The escrow amount shall be calculated in the following manner, -

   1. For consideration payable under the public offer, - upto and including Rs.100 crores - 25%; exceeding Rs.100 crores - 25% upto Rs.100 crores and 10% thereafter.

   2. For offers which are subject to a minimum level of acceptance, and the acquirer does not want to acquire a minimum of 20%, then 50% of the consideration payable under the public offer in cash shall be deposited in the escrow amount.

3. The total consideration payable under the public offer shall be calculated assuming full acceptances and at the highest price if the offer is subject to differential pricing, irrespective of whether the consideration for the offer is payable in cash or otherwise.

4. The escrow account referred in sub-regulation (1) shall consist of, -

   1. cash deposited with a scheduled commercial bank ; or

   2. bank guarantee in favour of the merchant banker; or

   3. deposit of acceptable securities with appropriate margin, with the merchant banker; or

   4. cash, deposited with a scheduled commercial bank in case of clause (b) of sub-regulation (2) of this Regulation

   .

5. Where the escrow account consists of deposit with a scheduled commercial bank, the acquirer shall, while opening the account, empower the merchant banker appointed for the offer to instruct the bank to issue a banker's cheque or demand draft for the amount lying to the credit of the escrow account, as provided in the Regulations.

6. Where the escrow account consists of bank guarantee, such bank guarantee shall be in favour of the merchant banker and shall be valid atleast for a period commencing from the date of public announcement until 30 days after the closure of the offer.

7. The acquirer shall, in case the escrow account consists of securities empower the merchant banker to realise the value of such escrow account by sale or otherwise provided that if there is any deficit on realisation of the value of the securities, the merchant banker shall be liable to make good any such deficit.

8. In case the escrow account consists of bank guarantee or approved securities, these shall not be returned by the merchant banker till after completion of all obligations under the Regulations.

9. In case there is any upward revision of offer, consequent upon a competitive bid or otherwise, the value of the escrow account shall be increased to equal at least 10% of the consideration payable upon such revision

10. Where the escrow account consist of bank guarantee or deposit of approved securities, the acquirer shall also deposit with the bank a sum of at least 1% of the total consideration payable, as and by way of security for fulfillment of the obligations under the Regulations by the acquirers

11. The Board shall in case of non-fulfillment of obligations under the Regulations by the acquirer forfeit the escrow account either in full or in part

11. A)  In case of failure by the acquirer to obtain shareholders' approval required under sub-regulation (3) of regulation 20, the amount in escrow account may be forfeited.

12. The escrow account deposited with the bank in cash shall be released only in the following manner, -

    1. the entire amount to the acquirer upon withdrawal of offer in terms of Regulation 27 upon certification by the merchant banker;

    2. for transfer to the special account opened in terms of sub-regulation (1) of Regulation 29.

       Provided the amount so transferred shall not exceed 90% of the cash deposit made under clause (a) of sub-regulation (2) of this regulation.

    3. to the acquirer, the balance of 10 per cent of the cash deposit made under clause (a) of sub-Regulation (2) of this Regulation or the cash deposit made under sub-Regulation 81[(10)] of this Regulation, on completion of all obligations under the Regulations, and upon certification by the merchant banker

    4. the entire amount to the acquirer upon completion of all obligations under the Regulations, upon certification by the merchant banker, where the offer is for exchange of shares or other secured instruments;

    5. the entire amount to the merchant banker, in the event of forfeiture for non-fulfillment of any of the obligations under the Regulations, for distribution among the target company, the regional stock exchange and to the shareholders who had accepted the offer in the following manner, after deduction of expenses, if any, of the merchant banker and the registrars to the offer, -

       1. one third of the amount to the target company;

       2. one third of the amount to the regional stock exchange for credit of the investor protection fund or any other similar fund for investor education, research, grievance redressal and similar such purposes as may be specified by the Board from time to time;

       3. residual one third to be distributed pro-rata among the shareholders who have accepted the offer.

13. In the event of non-fulfillment of obligations by the acquirer, the merchant banker shall ensure realisation of escrow amount by way of foreclosure of deposit, invocation of bank guarantee or sale of securities and credit proceeds thereof t o the regional stock exchange of the target company, for the credit of the Investor Protection Fund or any other similar fund.

1. For the amount of consideration payable in cash, the acquirer shall, within a period of 21 days from the date of closure of the offer, open a special account with a Bankers to an Issue registered with the Board and deposit therein, such sum as would, together with 90% of the amount lying in the escrow account, if any, make up the entire sum due and payable to the shareholders as consideration for acceptances received and accepted in terms of these Regulations and for this purpose, transfer the funds from the escrow account.

2. The unclaimed balance lying to the credit of the account referred in sub-regulation (1) at the end of 3 years from the date of deposit thereof shall be transferred to the investor protection fund of the regional stock exchange of the target company.

3. In respect of consideration payable by way of exchange of securities, the acquirer shall ensure that the securities are actually issued and despatched to the shareholders.