Substantial Acquisition of shares, Voting Rights or Control under SEBI (SAST) Regulations, 2011
Offer Size
1. Regulation 7(1)
Minimum offer size shall be 26% of the total shares of the Target Company.
Open offer under regulation 3, 4 for this min. offer size shall be made as on the 10th working day from the closure of the tendering period.
Tendering Period: it means a period within which shareholders may tender shares for acceptance of an open offer to acquire share.
2. 1st proviso to Regulation 7(1)
Total no of shares of the target company as on 10th working day from the closure of the tendering period shall take into account all increases in the number of outstanding shares during the offer period contemplated as of the date of the PA.
3. 2nd Proviso to Regulation 7(1)
In case of increase in the total number of shares then the offer size shall be proportionately increase, after making PA which is not contemplated on the date of the PA.
4. Regulation 7(2)
Open offer under regulation 6 i.e voluntary offer shall be such no. of shares entitled the holder thereof to exercise an additional 10% of total shares of the target company and open offer shall not exceed the maximum permissible non public shareholding.
5. 1st Proviso to Regulation 7(2)
In case of competing offer made, acquirer who made PA shall be entitled to increase the no. of shares which open offer has been made to such no. of shares as he deemed fit.
6. 2nd Proviso to Regulation 7(2)
Increase in the offer size shall be made within 15 days from the date of PA of competing offer.
7. Regulation 7(3)
Provisions of Regulation 3(2) shall be applicable in case of where acquirer opting to increase the offer size under Reg. 7(2).
8. Regulation 7(4)3
The provision of SCRA 1957 shall be applicable in case where shares acquired in the open offer were such that the shareholding of acquirer along with PAC pursuant to completion of the open offer result in increase in their shareholding exceeding the Minimum permissible non-public shareholding and in such case the acquirer shall be required to bring down the non public shareholding to the level specified.
9. Regulation 7(5)
Acquirer whose shareholding exceeds the maximum permissible non-public shareholding, shall not eligible to make voluntary delisting offer, unless a period of 12 Months has elapsed from the date of the completion of the offer period.
10. Regulation 7(6)
Any open offer under this regulation shall be made only to the shareholders of target company other than Acquirer, PAC, or person deemed to be PAC.
Offer Price
11. Regulation 8(2)
In case of Direct acquisition of shares or voting rights or control and indirect acquisition of shares or voting rights or control over Target company where the parameter of the regulation 5(2) are met, in such a case offer price shall be highest of the following-
1. Highest agreed or negotiated price per share of the target company for any acquisition under agreement attracting the obligation to make PA.
2. The VWAP paid or payable for acquisitions; whether by acquirer or by any PAC during 52 weeks immediately preceding the date of PA.
3. The highest price paid or payable for any acquisition, whether by the acquirer or by PAC with him during the 26 weeks immediately preceding the date of PA.
4. In case of Frequently traded shares
The VWAMP of such shares for a period of 60 trading days immediately preceding the date of PA as traded on the stock exchange where the maximum volume of Trading in shares of the target company are recorded during such period,
5. In case of shares are not frequently traded
In such case the price determined by the acquirer and manager to the open offer taking into account the valuation parameter.
6. The per share value under regulation 8(5), if applicable.
12. Regulation 8(3)
In case of indirect acquisition of shares or voting rights or control over Target company where the parameter of the regulation 5(2) are not met, in such a case offer price shall be highest of the following-
1. Highest agreed or negotiated price per share of the target company for any acquisition under agreement attracting the obligation to make PA.
2. The VWAP paid or payable for acquisitions; whether by acquirer or by any PAC during 52 weeks immediately preceding the earlier of,-
a. Date on which the primary acquisition was contracted;
b. The date on which the intention or decision to make the primary acquisition is announced in the public domain.
3. The highest price paid or payable for any acquisition, whether by the acquirer or by PAC with him during the 26 weeks immediately preceding the earlier of,-
a. Date on which the primary acquisition was contracted;
b. The date on which the intention or decision to make the primary acquisition is announced in the public domain.
4. The highest price paid or payable by acquirer or PAC with him, between the earlier of-
a. the date on which the primary acquisition is contracted and
b. the date on which the intention or decision to make PA is announced in the public domain and
c. The date of the public announcement of the open offer for shares of the target company made under these regulations.
5. In case of Frequently traded shares
The VWAMP of such shares for a period of 60 trading days immediately preceding the the earlier of,-
a. Date on which the primary acquisition was contracted;
b. The date on which the intention or decision to make the primary acquisition is announced in the public domain.
as traded on the stock exchange where the maximum volume of Trading in shares of the target company are recorded during such period,
6. Per share value computed Under regulation 8(5)
13. Regulation 8(4)
Where determination of price u/r 8(3) is not possible then without prejudice to the requirement of Reg. 8(5) the offer price shall be the fair price of the shares of the target company to be determined by the acquirer and manager to the open offer talking into account the valuation parameters.
14. Regulation 8(5)
In case of indirect acquisition of shares where-
a. Proportionate NAV of the target Company as a % of Consolidated NAV of the entity being acquired;
b. Proportionate sales turnover of the target Company as a % of the consolidated sales turnover of the entity or business being acquired, or
c. Proportionate market capitalization of the target Company as a percentage of the enterprise value for entity or business being acquired.
Is in excess of 15% on the basis of the most recent audited financial statements, the acquirer shall be required to compute and disclose, in letter of offer, the per share value of the target company taken into account the for the acquisition along with a detailed description of methodology adopted for such computation.
Method of computation of percentage (%)
For this purpose market capitalization of the target company shall be taken into account on the basis of the VWAMP i.e volume weighted average market price of such shares on the stock exchange for a period of 60 days preceding the earlier of, the date on which the primary acquisition is contracted, and the date on which the intention or decision to make the primary acquisition is announced in the public domain, as traded on stock exchange where maximum volume of trading in shares of target company are recorded during that period.
15. Regulation 8(6)
In case of any outstanding convertible instruments convertible into shares of the target company at a specific price, the price at which such instrument are to be converted into shares shall be considered as a parameter under Reg. 8(2) ,8(3).
16. Regulation 8(7)
the price paid for shares of the target company shall include any price paid or agreed to be paid for the shares or voting rights in, or control over the target company, in any form whatsoever, whether stated in the agreement for acquisition of shares or in any incidental, contemporaneous or col lateral agreement, whether termed as control premium or as non-compete fees or otherwise
17. Regulation 8(8)
Where acquirer himself or through PAC with him acquire any shares or voting rights in target company during the offer period, by subscription or purchase, at a price higher than the offer price then the offer price shall stand revised to the highest price paid or payable for any such instruments.
18. Regulation 8(9)
The price parameters may be adjusted by the acquirer in consultation with the manager to the offer, for corporate actions such as issuances pursuant to rights issue, bonus issue, stock consolidations, stock splits, payment of dividend, de-mergers and reduction of capital, where the record date for effecting such corporate actions falls prior to three working days before the commencement of the tendering period:
19. Proviso to Regulation 8(9)
No adjustment shall be made for dividend declared with a record date falling during such period except where the dividend per share is more than fifty per cent higher than the average of the dividend per share paid during the three financial years preceding the date of the public announcement.
20. Regulation 8(10)
Where the acquirer or persons acting in concert with him acquires shares of the target company during the period of twenty-six weeks after the tendering period at a price higher than the offer price under these regulations, the acquirer and persons acting in concert shall pay the difference between the highest acquisition price and the offer price, to all the shareholders whose shares were accepted in the open offer, within sixty days from the date of such acquisition:
21. Proviso to Regulation 810)
Provided that this provision shall not be applicable to acquisitions under another open offer under these regulations or pursuant to the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, or open market purchases made in the ordinary course on the stock exchanges, not being negotiated acquisition of shares of the target company whether by way of bulk deals, block deals or in any other form.
22. Regulation 8(11)
Where the open offer is subject to a minimum level of acceptances, the acquirer may, subject to the other provisions of this regulation, indicate a lower price, which will not be less than the price determined under this regulation, for acquiring all the acceptances despite the acceptance falling short of the indicated minimum level of acceptance, in the event the open offer does not receive the minimum acceptance.
23. Regulation 8(12)
In the case of any indirect acquisition, other than the indirect acquisition referred in sub-regulation (2) of regulation 5, the offer price shall stand enhanced by an amount equal to a sum determined at the rate of ten per cent per annum for the period between the earlier of the date on which the primary acquisition is contracted or the date on which the intention or the decision to make the primary acquisition is announced in the public domain, and the date of the detailed public statement, provided such period is more than fiveworking days.
24. Regulation 8(13)
The offer price for partly paid up shares shall be computed as the difference between the offer price and the amount due towards calls-in-arrears including calls remaining unpaid with interest, if any, thereon.
25. Regulation 8(15)
In the event of any of the price parameters contained in this regulation not being available in Indian rupees, the conversion of such amount into Indian rupees shall be effected at the exchange rate as prevailing on the date preceding the date of PA and the acquirer shall set out the source of such exchange rate in the PA, the DPA and the letter of offer.
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