3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

Home

Back

Note:Theanswersgivenherearegeneralinnature.Thequestionsandtheanswershave
beenstructuredtoenablethereaderstogainabroadunderstandingof(Substantial
AcquisitionofSharesandTakeovers)Regulations,1997.Forexactdetailsthereaderis
advisedtorefertothecopyoftheSEBI(SubstantialAcquisitionofSharesandTakeovers)
Regulations,1997whichareavailableonourwebsite.Readersmayalsonotethatthese
answersdonotaimtoexplaintheRegulationsinforce,sinceanswerstoquestionsinvolving
particularcase/factpatternmaydependuponadministrativedecisionsandCourtorders,if
any,inrespectofthesame.
1.WhatismeantbyTakeovers&Substantialacquisitionofshares?
Whenan"acquirer"takesoverthecontrolofthe"targetcompany",itistermedasTakeover.
Whenanacquireracquires"substantialquantityofsharesorvotingrights"oftheTarget
Company,itresultsintosubstantialacquisitionofshares.Theterm"Substantial"whichisused
inthiscontexthasbeenclarifiedsubsequently.
2.WhatisaTargetcompany?
ATargetcompanyisalistedcompanyi.e.whosesharesarelistedonanystockexchangeand
whosesharesorvotingrightsareacquired/beingacquiredorwhosecontrolistaken
over/beingtakenoverbyanacquirer.
3.WhoisanAcquirer?
AnAcquirermeans(includespersonsactinginconcert(PAC)withhim)any
individual/company/anyotherlegalentitywhichintendstoacquireoracquiressubstantial
quantityofsharesorvotingrightsoftargetcompanyoracquiresoragreestoacquirecontrol
overthetargetcompany
4.Whatismeantbytheterm"PersonsActinginConcert(PACs)"
PACsareindividual(s)/company(ies)/anyotherlegalentity(ies)whoareactingtogetherfora
commonobjectiveorforapurposeofsubstantialacquisitionofsharesorvotingrightsor
gainingcontroloverthetargetcompanypursuanttoanagreementorunderstandingwhether
formalorinformal.Actinginconcertwouldimplycooperation,coordinationforacquisitionof
votingrightsorcontrol.Thiscooperation/coordinatedapproachmayeitherbedirector
indirect.
TheconceptofPACassumessignificanceinthecontextofsubstantialacquisitionofshares
sinceitispossibleforanacquirertoacquiresharesorvotingrightsinacompany"inconcert"
withanyotherpersoninsuchamannerthattheacquisitionmadebythemmayremain
individuallybelowthethresholdlimitbutmaycollectivelyexceedthethresholdlimit.
Unlessthecontraryisestablishedcertainentitiesaredeemedtobepersonsactinginconcert
likecompanieswithitsholdingcompanyorsubsidiarycompany,mutualfundswithitssponsor/
trustee/Assetmanagementcompany,etc.
5.Howsubstantialquantityofsharesorvotingrightsisdefined?
TheSEBI(SubstantialAcquisitionofSharesandTakeovers)Regulations,1997hasdefined
substantialquantityofsharesorvotingrightsdistinctlyfortwodifferentpurposes:
I.Thresholdofdisclosuretobemadebyacquirer(s):
1)5%andmoresharesorvotingrights:Apersonwho,alongwithPAC,ifany,(collectively
referredtoas"Acquirer"hereinafter)acquiressharesorvotingrights(whichwhentaken
togetherwithhisexistingholding)wouldentitlehimtomorethan5%or10%or14%sharesor
votingrightsoftargetcompany,isrequiredtodiscloseateverystagetheaggregateofhis
shareholdingtothetargetcompanyandtheStockExchangeswithin2daysofacquisitionor
receiptofintimationofallotmentofshares.
2)Anypersonwhoholdsmorethan15%butlessthan55%sharesorvotingrightsoftarget
company,andwhopurchasesorsellssharesaggregatingto2%ormoreshallwithin2days
http://www.sebi.gov.in/faq/takeover_faq.html

1/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

disclosesuchpurchase/salealongwiththeaggregateofhisshareholdingtothetarget
companyandtheStockExchanges.
3)Anypersonwhoholdsmorethan15%sharesorvotingrightsoftargetcompanyanda
promoterandpersonhavingcontroloverthetargetcompany,shallwithin21daysfromthe
financialyearendingMarch31aswellastherecorddatefixedforthepurposeofdividend
declaration,discloseeveryyearhisaggregateshareholdingtothetargetcompany.
4)TheTargetcompany,inturn,isrequiredtoinformallthestockexchangeswheretheshares
oftargetcompanyarelisted,everyyearwithin30daysfromthefinancialyearendingMarch
31aswellastherecorddatefixedforthepurposeofdividenddeclaration.
(II)Triggerpointformakinganopenofferbyanacquirer
1)15%sharesorvotingrights:
Anacquirerwhointendstoacquireshareswhichalongwithhisexistingshareholdingwould
entitlehimtoexercise15%ormorevotingrights,canacquiresuchadditionalsharesonlyafter
makingapublicannouncement(PA)toacquireatleastadditional20%ofthevotingcapitalof
targetcompanyfromtheshareholdersthroughanopenoffer.
2)Creepingacquisitionlimit:
Anacquirerwhoholds15%ormorebutlessthan55%ofsharesorvotingrightsofatarget
company,canacquiresuchadditionalsharesaswouldentitlehimtoexercisemorethan5%of
thevotingrightsinanyfinancialyearendingMarch31onlyaftermakingapublic
announcementtoacquireatleastadditional20%sharesoftargetcompanyfromthe
shareholdersthroughanopenoffer.
3)Consolidationofholding:
Anacquirerwhoholds55%ormorebutlessthan75%sharesorvotingrightsofatarget
company,canacquirefurthersharesorvotingrightsonlyaftermakingapublicannouncement
toacquireatleastadditional20%sharesoftargetcompanyfromtheshareholdersthroughan
openoffer.
6.Howis"control"defined?
Controlincludestherighttoappointdirectlyorindirectlyorbyvirtueofagreementsorinany
othermannermajorityofdirectorsontheBoardofthetargetcompanyortocontrol
managementorpolicydecisionsaffectingthetargetcompany.However,incasetherearetwo
ormorepersonsincontroloverthetargetcompanythecesserofanyoneofsuchpersons
fromsuchcontrolshallnotbedeemedtobeachangeincontrolofmanagementnorshallany
changeinthenatureandquantumofcontrolamongstthemconstitutechangeincontrolof
managementprovidedthistransferisdoneintermsofReg.3(1)(e).Alsoifconsequentupon
changeincontrolofthetargetcompanyinaccordancewithregulation3,thecontrolacquired
isequaltoorlessthanthecontrolexercisedbyperson(s)priortosuchacquisitionofcontrol,
suchcontrolshallnotbedeemedtobeachangeincontrol.
7.WhatisaPublicAnnouncement(PA)?
Apublicannouncementisanannouncementmadeinthenewspapersbytheacquirerprimarily
disclosinghisintentiontoacquiresharesofthetargetcompanyfromexistingshareholdersby
meansofanopenoffer.
8.WhatarethedisclosuresrequiredtobemadeunderPublicAnnouncement?
Thedisclosuresintheannouncementincludetheofferprice,numberofsharestobeacquired
fromthepublic,identityofacquirer,purposeofacquisition,futureplansofacquirer,ifany,
regardingthetargetcompany,changeincontroloverthetargetcompany,ifany,the
proceduretobefollowedbyacquirerinacceptingthesharestenderedbytheshareholders
andtheperiodwithinwhichalltheformalitiespertainingtotheofferwouldbecompleted.
9.WhatistheobjectiveofPublicAnnouncement?
ThePublicAnnouncementismadetoensurethattheshareholdersofthetargetcompanyare
http://www.sebi.gov.in/faq/takeover_faq.html

2/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

awareofanexitopportunityavailabletothem.
10.CanAcquirermakeanofferforlessthan20%ofshares?
No,theacquirercannotmakeanofferforlessthan20%ofshares.Theacquirerhastomake
anofferforaminimumof20%(lessonlyinspecifiedcases).
11.WhoisrequiredtomakeaPublicAnnouncementandwhenisthePublicAnnouncement
requiredtobemade?
TheAcquirerisrequiredtoappointaMerchantBanker(MB)registeredwithSEBIbefore
makingaPA.PAisrequiredtobemadethroughthesaidMB.Theacquirerisrequiredto
maketheP.Awithinfourworkingdaysoftheenteringintoanagreementtoacquiresharesor
decidingtoacquireshares/votingrightsoftargetcompanyorafteranysuchchangeor
changesaswouldresultinchangeincontroloverthetargetcompany.
Incaseofindirectacquisitionorchangeincontrol,thePAshallbemadebytheacquirerwithin
threemonthsofconsummationofsuchacquisitionorchangeincontrolorrestructuringofthe
parentorthecompanyholdingsharesoforcontroloverthetargetcompanyinIndia.Theoffer
priceinsuchcasesshallbedeterminedwithreferencetothedateofthepublicannouncement
fortheparentcompanyandthedateofthepublicannouncementforacquisitionofsharesof
thetargetcompany,whicheverishigher,inaccordancewiththeparametersmentionedinthe
TakeoverRegulations.
12.WhetherappointmentofMerchantBankerfortheofferprocessismandatory?
Yes
13.WhatdocumentsaretobefiledwithSEBIaftermakingaP.A.andwhenarethese
documentstobefiled?
AhardandsoftcopyofthePAarerequiredtobesubmittedtoSEBIsimultaneouslywiththe
publicationofthesameinthenewspapers.
AdraftletterofofferisrequiredtobefiledwithSEBIwithin14daysfromthedateofPublic
AnnouncementalongwithafilingfeeofRs.50,000/perletterofoffer(payablebyBankers
Cheque/DemandDraft)AduediligencecertificateaswellasregistrationdetailsasperSEBI
circularno.RMB(G1)seriesdatedJune26,1997arealsorequiredtobefiledalongwiththe
draftletterofoffer.
14.DoesSEBI"approve"thedraftletterofoffer?
FilingofdraftLetterofOfferwithSEBIshouldnotinanywaybedeemedorconstruedthatthe
samehasbeencleared,vettedorapprovedbySEBI.TheLetterofOfferissubmittedtoSEBI
foralimitedpurposeofoverseeingwhetherthedisclosurescontainedthereinaregenerally
adequateandareinconformitywiththeTakeoverRegulations.Thisrequirementistofacilitate
theshareholderstotakeaninformeddecisionwithregardtotheOffer.SEBIdoesnottakeany
responsibilityeitherforthetruthfulnessorcorrectnessofforanystatement,forfinancial
soundnessofAcquirer,orofPersonsActinginConcert,orofTargetCompany,whoseshares
areproposedtobeacquiredorforthecorrectnessofthestatementsmadeoropinions
expressedintheLetterofOffer.ItshouldbeunderstoodthatwhileAcquirerisprimarily
responsibleforthecorrectness,adequacyanddisclosureofallrelevantinformationinthis
LetterofOffer,theManagertotheOffer(aMerchantBanker)isexpectedtoexercisedue
diligencetoensurethattheAcquirerdulydischargesitsresponsibilityadequately.
15.Whatisaletterofoffer?
Aletterofofferisadocumentaddressedtotheshareholdersofthetargetcompanycontaining
disclosuresoftheacquirer/PACs,targetcompany,theirfinancials,justificationoftheoffer
price,theofferprice,numberofsharestobeacquiredfromthepublic,purposeofacquisition,
futureplansofacquirer,ifany,regardingthetargetcompany,changeincontroloverthetarget
company,ifany,theproceduretobefollowedbyacquirerinacceptingthesharestenderedby
theshareholdersandtheperiodwithinwhichalltheformalitiespertainingtotheofferwouldbe
completed.
http://www.sebi.gov.in/faq/takeover_faq.html

3/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

16.WhathappensonceSEBIgivescommentsonthedraftletterofoffer?
TheMBwillincorporateintheletterofofferthecommentsmadebySEBIandthensendwithin
45daysfromthedateofPAtheletterofofferalongwiththeblankacceptanceform,toallthe
shareholderswhosenamesappearintheregisterofthecompanyontheSpecifiedDate.The
offerremainsopenfor20days.TheshareholdersarerequiredtosendtheirShare
certificate(s)/relateddocumentstoregistrarorMerchantbankerasspecifiedinPAandletter
ofoffer.Theacquirerisrequiredtopayconsiderationtoallthoseshareholderswhoseshares
areacceptedundertheoffer,within15daysfromtheclosureofoffer.
Intheirowninterest,theshareholdersareadvisedtosendsuchdocumentsunderregistered
post.Further,theshareholdersmayalsonotethatundernocircumstancessuchdocuments
shouldbesenttotheacquirer.
17.Howisthepricedeterminedinanopenoffer?
SEBIdoesnotapprovetheofferprice.Theacquirer/MerchantBankerisrequiredtoensure
thatalltherelevantparametersaretakenintoconsiderationwhiledeterminingtheofferprice
andthatjustificationforthesameisdisclosedintheletterofoffer
Therelevantparametersare:
(a)negotiatedpriceundertheagreementwhichtriggeredtheopenoffer.
(b)pricepaidbytheacquirerorpersonsactinginconcertwithhimforacquisition,ifany,
includingbywayofallotmentinapublicorrightsorpreferentialissueduringthetwentysix
weekperiodpriortothedateofpublicannouncement,whicheverishigher
(c)theaverageoftheweeklyhighandlowoftheclosingpricesofthesharesofthetarget
companyasquotedonthestockexchangewherethesharesofthecompanyaremost
frequentlytradedduringthetwentysixweeksortheaverageofthedailyhighandlowpricesof
thesharesasquotedonthestockexchangewherethesharesofthecompanyaremost
frequentlytradedduringthetwoweeksprecedingthedateofpublicannouncement,whichever
ishigher.
IncasethesharesofTargetCompanyarenotfrequentlytradedtheninsteadofpoint(c)
above,parametersbasedonthefundamentalsofthecompanysuchasreturnonnetworthof
thecompany,bookvaluepershare,EPSetc.arerequiredtobeconsideredanddisclosed.
Incaseofnoncompeteagreementforpaymenttoanypersonotherthanthetargetcompany,
ifthepaymentismorethan25%oftheofferpricearrivedintemrsoftheRegulations,the
samehastobefactoredintotheofferprice.
18.WhatarethecriteriafordeterminingwhetherthesharesoftheTargetCompanyare
frequentlyorinfrequentlytraded?
Thesharesofthetargetcompanywillbedeemedtobeinfrequentlytradediftheannualised
tradingturnoverinthatshareduringthepreceeding6calendarmonthspriortothemonthin
whichthePAismadeislessthan5%(bynumberofshares)ofthelistedshares.Ifthesaid
turnoveris5%ormore,itwillbedeemedtobefrequentlytraded.
19.Areonlythoseshareholderswhosenamesappearintheregisteroftargetcompanyona
specifieddate,eligibletotendertheirsharesintheopenoffer?
No.Anyshareholderwhoholdsthesharesonorbeforethedateofclosureoftheofferis
eligibletoparticipateintheoffer.
20.Whatisacompetitivebid?
Competitivebidisanoffermadebyaperson,otherthantheacquirerwhohasmadethefirst
publicannouncement.
21.Whathappensifthereisacompetitiveofferandapersonhadavailedthefirstofferata
lowerprice?Canthepersonswitchhisacceptancetoabetteroffer?
Yes,switchingofacceptancesbetweendifferentoffersispossible.Theshareholderhasthe
http://www.sebi.gov.in/faq/takeover_faq.html

4/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

optiontowithdrawacceptancetenderedbyhimuptothreeworkingdayspriortothedateof
closureoftheoffer
Toenabletheshareholderstobeinabetterpositiontodecideastowhichofthesubsisting
offersisbetterandalsonottocauselastminutedecisions/confusions,theofferpriceandsize
areeffectivelyfrozenforthelast7workingdayspriortotheclosingdateoftheoffers.
Shareholdersmaywaittillthecommencementofthatperiodtobeawareofupwardrevisions
intheofferpriceandsizeoftheoffers,ifany.
22.Cananacquirerwithdrawtheofferoncemade?
No,theofferoncemadecannotbewithdrawnexceptinthefollowingcircumstances:
Statutoryapproval(s)requiredhavebeenrefused
Thesoleacquirerbeinganaturalpersonhasdied
SuchcircumstancesasintheopinionoftheBoardmeritswithdrawal.
23.Howcanapersonavailtheofferifhe/shehasnotreceivedtheletterofoffer?
ThePublicAnnouncementcontainsprocedureforsuchcasesi.e.wheretheshareholdersdo
notreceivetheletterofofferordonotreceivetheletterofofferintime.Theshareholdersare
usuallyadvisedtosendtheirconsenttoRegistrartooffer,ifanyortoMBonplainpaper
statingthename,address,numberofsharesheld,DistinctiveFolioNo,numberofshares
offeredandbankdetailsalongwiththedocumentsmentionedinthePublicAnnouncement,
beforeclosureoftheoffer.Thepublicannouncementandtheletterofofferalongwiththeform
ofacceptanceisavailableontheSEBIwebsiteatwww.sebi.gov.in.
24.Isthereanycompensationtoashareholderfordelayedreceiptofpaymentunderthe
offer?
Acquirersarerequiredtocompletethepaymentofconsiderationtoshareholderswhohave
acceptedtheofferwithin15daysfromthedateofclosureoftheoffer.Incasethedelayin
paymentisonaccountofnonreceiptofstatutoryapprovalsandifthesameisnotduetowilful
defaultorneglectonpartoftheacquirer,theacquirerswouldbeliabletopayinteresttothe
shareholdersforthedelayedperiodinaccordancewithRegulations.
Ifthedelayinpaymentofconsiderationisnotduetotheabovereasons,itwouldbetreatedas
aviolationoftheRegulationsandtherefore,alsoliableforotheractionintermsofthe
Regulations.
25.Istheacquirerrequiredtoacceptallthesharesundertheopenoffer?
No,ifthesharesreceivedbytheacquireraremorethanthesharesagreedtobeacquiredby
him,theacceptancewouldbeonproportionatebasis.
26.Whatarethesafeguardsincorporatedinthetakeoverprocesssoastoensurethat
shareholdersgettheirpaymentsundertheoffer/receivebacktheirsharecertificates?
BeforemakingthePublicAnnouncement,theacquirerhastoopenanescrowaccountinthe
formofcashdepositedwithascheduledcommercialbankorbankguaranteeinfavourofthe
MerchantBankerordepositofacceptablesecuritieswithappropriatemarginwiththeMerchant
Banker.TheMerchantBankerisalsorequiredtoconfirmthatfirmfinancialarrangementsare
inplaceforfulfillingtheofferobligations.Incase,theacquirerfailstomakethepayment,MB
hasarighttoforfeittheescrowaccountanddistributetheproceedsinthefollowingway.
a)1/3ofamounttotargetcompany
b)1/3toregionalSEs,forcredittoinvestorprotectionfundetc.
c)1/3tobedistributedonproratabasisamongtheshareholderswhohaveacceptedtheoffer.
TheMerchantBankerisrequiredtoensurethattherejecteddocumentswhicharekeptinthe
custodyoftheRegistrar/MerchantBankeraresentbacktotheshareholderthrough
RegisteredPost.
http://www.sebi.gov.in/faq/takeover_faq.html

5/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

Besidesforfeitureofescrowaccount,SEBIcaninitiateseparateactionagainsttheacquirer
whichmayincludeprosecution/barringtheacquirerfromenteringthecapitalmarketfora
specifiedperiodetc.
27.Whetheralltypesofacquisitionsofsharesorvotingrightsoverandabovethelimits
specifiedintheSEBI(SubstantialAcquisitionofSharesandTakeovers)Regulations,1997,
necessarilyrequireacquirertomakeapublicannouncementfollowedupbyanopenoffer?
No.Certaintypeofacquisitionsasstipulatedunderregulation3ofChapterIofthe
Regulations,arespecificallyexemptedfromtheopenofferprocesssubjecttotheacquirer
complyingwiththerequirements/conditions,asmaybeapplicable,forsuchacquisitions.Such
exemptionsincludeacquisitionsarisingoutoffirmallotmentinpublicissues,rightsissues,
intersetransferamongstgroupcompanies,relatives,promoters,acquirerandPACs,Indian
promotersandforeigncollaboratorsandtransferofsharesfromstatelevelFinancial
Institutionstocopromotersofcompanypursuanttotheagreementetc.
28.Whicharethoseacquisitions/transactionswherereportingtoSEBIismandatory?
ReportingismandatoryunderRegulation3(4)inrespectofacquisitionsarisingoutoffirm
allotmentinpublicissues,rightsissues,intersetransferamongstgroupcompanies,relatives,
promoters,acquirerandPACs,Indianpromotersandforeigncollaboratorsandtransferof
sharesfromstatelevelFinancialInstitutionstocopromotersofcompanypursuanttothe
agreement.
29.Whatisthetimeframetosubmitsuchreportandprocedurefeethereof?
ThereportisrequiredtobesubmittedtoSEBIwithin21daysfromthedateofacquisition/
allotmentalongwithafeeofRs.10,000/perreport.
30.Isthereanyprescribedformofapplicationforvariousreports/documentsmentioned
above?
YES,SEBIhasspecifiedtheformat,whichisavailableontheSEBIwebiteatwww.sebi.gov.in
31.WhatinformationisrequiredtobefurnishedtoStockExchangesincomplianceoftheSEBI
(SubstantialAcquisitionofSharesandTakeovers)Regulations,1997andwhenisitrequiredto
befurnished?
Fortransactions,whichentailreportingrequirements,detailsoftheproposedacquisitionneed
tobefiledwithSEswheresharesoftargetcompanyarelisted,atleastfourworkingdays
beforethedateofactualacquisition/allotment.
Apersonwho,alongwithPAC,ifany,(collectivelyreferredtoas"Acquirer"hereinafter)
acquiressharesorvotingrights(whichwhentakentogetherwithhisexistingholding)would
entitlehimtomorethan5%or10%or14%sharesorvotingrightsoftargetcompany,is
requiredtodiscloseateverystagetheaggregateofhisshareholdingtothetargetcompany
andtheStockExchangeswithin2daysofacquisitionorreceiptofintimationofallotmentof
shares.

Anypersonwhoholdsmorethan15%butlessthan55%sharesorvotingrightsoftarget
company,andwhopurchasesorsellssharesaggregatingto2%ormoreshallwithin2days
disclosesuchpurchase/salealongwiththeaggregateofhisshareholdingtothetarget
companyandtheStockExchanges
Further,annualdisclosureshavetobegivenregardingholdingofpromoters,personsin
controlandpersonsholdingmorethan15%sharesorvotingrightsoftheTargetcompany.
Further,acopyofthePublicAnnouncementtoacquiresharesfrompublicistobegiventothe
StockExchangessimultaneouslywiththepublicationinthenewspapers..Subsequently,
upwardrevisionsinoffer,withdrawalofofferhasalsotobeintimatedtotheStockExchanges
simultaneously.
32.Whathappensiftheacquirer/targetcompany/MerchantBankerviolatestheprovisionsof
theRegulations?
http://www.sebi.gov.in/faq/takeover_faq.html

6/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

TheRegulationshavelaiddownthegeneralobligationsofacquirer,targetcompanyandthe
MerchantBanker.Forfailuretocarryouttheseobligationsaswellasforfailure/non
complianceofotherprovisionsoftheRegulations,theRegulationshavelaiddownthe
penaltiesfornoncompliance.Thesepenaltiesinclude
a)forfeitureoftheescrowaccount,
b)directingthepersonconcernedtosellthesharesacquiredinviolationoftheregulations,
c)directingthepersonconcernednottofurtherdealinsecurities,
d)levymonetarypenalties,
e)initiateprosecutionproceedings.
f)directingappointmentofamerchantbankerforthepurposeofcausingdisinvestmentof
sharesacquiredinbreachofregulations10,11or12
g)directingtransferofanyproceedsorsecuritiestotheInvestorsProtectionFundofa
recognisedstockexchange
h)directingthetargetcompanyordepositorytocanceltheshareswhereanacquisitionof
sharespursuanttoanallotmentisinbreachofregulations10,11or12
i)directingthetargetcompanyorthedepositorynottogiveeffecttotransferorfurtherfreeze
thetransferofanysuchsharesandnottopermittheacquireroranynomineeoranyproxyof
theacquirertoexerciseanyvotingorotherrightsattachedtosuchsharesacquiredinviolation
ofregulations10,11or12
j)debarringanypersonconcernedfromaccessingthecapitalmarketordealinginsecurities
forsuchperiodasmaybedeterminedbytheBoard
k)directingthepersonconcernedtomakepublicoffertotheshareholdersofthetarget
companytoacquiresuchnumberofsharesatsuchofferpriceasdeterminedbytheBoard
l)directingdisinvestmentofsuchsharesasareinexcessofthepercentageofthe
shareholdingorvotingrightsspecifiedfordisclosurerequirementundertheregulations6,7or
8
m)directingthepersonconcernednottodisposeofassetsofthetargetcompanycontraryto
theundertakinggivenintheletterofoffer
n)directingthepersonconcerned,whohasfailedtomakeapublicofferordelayedthemaking
ofapublicofferintermsoftheseRegulations,totheshareholders,whoseshareshavebeen
acceptedinthepublicoffermadeafterthedelay,theconsiderationamountalongwithinterest
attheratenotlessthantheapplicablerateofinterestpayablebybanksonfixeddeposits.
Further,theBoardofDirectorsofthetargetcompanywouldalsobeliableforactionintermsof
theRegulationsandtheSEBIActforfailuretocarryouttheirobligationsspecifiedinthe
Regulations.
Actioncanalsobeinitiatedforsuspension,cancellationofcertificateofregistrationagainstan
intermediarysuchastheMerchantBankertotheoffer.
33.AremergersandamalgamationsofcompaniesalsocoveredundertheSEBI(Substantial
AcquisitionofSharesandTakeovers)Regulations,1997?
No,onlytakeoversandsubstantialacquisitionofsharesofalistedcompanyfallwithinpurview
ofSEBI(SubstantialAcquisitionofSharesandTakeovers)Regulations,1997.Mergersand
AmalgamationsareoutsidethepurviewofSEBIastheyareasubjectmatteroftheCompanies
Act,1956.

34.WhatistheTakeoverPanel?

Anacquirerwhoproposestoacquiresharesthroughamodewhichisnotspecificallycovered
http://www.sebi.gov.in/faq/takeover_faq.html

7/8

3/11/2015

www.sebi.gov.in/faq/takeover_faq.html

underregulation3mayseekexemptionfromtheapplicabilityoftheprovisionsoftheoffer
processbymakinganapplication.SEBIhasconstitutedapanelconsistingofindependent
personstoexaminesuchapplicationswhichiscalledtheTakeoverPanel.
ThepresentcompositionoftheTakeoverPanelisasfollows:
SEBITAKEOVERPANELMEMBERS(WITHEFFECTFROMNOVEMBER
02,2007)

Sl.No.
1
2

Nameofmember

Details

ShriKKannan
ShriCRMehta

3
4

ShriPNShah
ShriRSLoona

FormerChairman,BankofBaroda
Former Member, Company Law
Board
CharteredAccountant.
FormerExecutiveDirector,SEBI

35.WhatistheprocedureformakinganapplicationtotheTakeoverPanelforseeking
exemption?
TheacquirershallmakeanapplicationinthestandardformatspecifiedbySEBIgivingallthe
relevantdetailsoftheproposedacquisitionalongwithafeeofRs25,000/.Thestandard
formatisavailableontheSEBIwebsitewww.sebi.gov.in.
36.HowdoesSEBIprocesssuchapplication?
SEBIforwardstheapplicationtotheTakeoverPanelwithin45daysofitsreceipt.The
TakeoverPanelwouldmakearecommendationontheapplicationtoSEBIwithin15daysof
receiptoftheapplicationfromSEBI.SEBI,afteraffordingreasonableopportunitytothe
concernedparties,wherevernecessary,wouldpassareasonedorderontheapplicationwithin
30daysthereofandpublishthesame.
37.Arethereanyspecificprovisionsfordisinvestmentofgovernmentshareholdinginlisted
PublicSectorUndertakings(PSUs)?
Tofacilitateacquisitionofsharesorvotingrightsorcontrolbystrategicpartnerfromthe
CentralGovernmentinalistedPSUandtoharmonisetheprocessofdisinvestmentand
investorprotection.
Thesaidamendmentsincludethefollowing:
Transferofsharesandcontroltothestrategicpartner/acquirerevenbeforecompletingthe
openofferformalitiesintermsoftheRegulations
Thedateofenteringinto

http://www.sebi.gov.in/faq/takeover_faq.html

8/8