Regulation 29 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, mandates critical disclosure requirements for acquisitions and disposals of shares and voting rights in target companies. This regulation aims to ensure transparency and protect the interests of all stakeholders in the securities market. Understanding these requirements is essential for acquirers and investors to comply with regulatory standards and maintain market integrity.
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
Regulation 29. Disclosure of acquisition and disposal
As per Regulation 29(1) Any acquirer, together with persons acting in concert (PAC), acquiring shares or voting rights in a target company, which taken together aggregates to 5% or more of the shares of such target company, shall disclose their aggregate shareholding and voting rights in such target company in such form as may be specified.
Provided that in case of listed entity which has listed its specified securities on Innovators Growth Platform, any reference to “5 %” shall be read as “10%”.
As per Regulation 29(2) Any person together with PAC, already holds shares or voting rights entitling them to 5% or more of the shares or voting rights in a target company, shall disclose the number of shares or voting rights held and any change in shareholding or voting rights, even if such change results in shareholding falling below 5%, if there has been change in such holdings from the last disclosure made under sub-regulation (1) or under this sub-regulation; and such change exceeds 2% of total shareholding or voting rights in the target company, in such form as may be specified.
Provided that in case of listed entity which has listed its specified securities on Innovators Growth Platform, any reference to “5 %” shall be read as “10%” and any reference to “2 %” shall be read as “5%”.
Scenario:
- Any acquirer either individually or with any other person acting with him, acquires shares aggregating to 5% of share capital or voting rights of the Company- Disclosure required. (Annexure A)
- Any acquirer who either individually or with other persons collectively holds 5% of shares, if any disposal resulted in holdings falling 5%, he has to give disclosure to the stock exchange. E.g. If an acquirer holding 6%, subsequently he sold shares amounting to 1.5%, resulting in 4.5% holding, thus he has to give disclosure as it results in holding falling below 5%. (Annexure B)
- Any acquirer either individually or with other persons collectively holds 5% of shares, further acquires more than 2% of shares or disposes shares of more than 2% – Disclosure required. (Annexure B)
As per sub regulation (3) the disclosures specified above shall be given within 2 working days of the receipt of intimation of allotment of shares, or the acquisition or the disposal of shares or voting rights in the target company to the Target Company and the Stock Exchange wherever the shares of the Target company is listed.
Such disclosures have to be given only by the acquirer to the Stock Exchange via E-mail or any other recognized means, the Target company cannot send or disclose those disclosures on behalf of the acquirer.
As per sub regulation (4) shares taken by way of encumbrance shall be treated as an acquisition, shares which are already held by any person by way of encumbrance, upon release of encumbrance shall be treated as a disposal, and disclosures shall be made by such person accordingly in such form as may be specified.
Provided that such requirement shall not apply to a scheduled commercial bank or public financial institution or a housing finance company or a systemically important non-banking financial company as pledgee in connection with a pledge of shares for securing indebtedness in the ordinary course of business.
Format for Disclosure: Enclosed as above
Annexure A
Format for Disclosures under Regulation 29(1) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
Part-A- Details of the Acquisition
| Name of the Target Company (TC) | |||
| Name(s) of the acquirer and Persons Acting in Concert
(PAC) with the acquirer |
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| Whether the acquirer belongs to Promoter/ Promoter group | |||
| Name(s) of the Stock Exchange(s) where the shares of TC are Listed | |||
|
Details of the acquisition as follows |
Number | % w.r.t. total share/voting capital wherever applicable(*) |
% w.r.t. total diluted share/voting capital of the TC (**) |
| Before the acquisition under consideration, holding of acquirer along with PACs of:
a) Shares carrying voting rights b) Shares in the nature of encumbrance (pledge/ lien/ non-disposal undertaking/ others) c) Voting rights (VR) otherwise than by equity shares d) Warrants/convertible securities/any other instrument that entitles the acquirer to receive shares carrying voting rights in the TC (specify holding in each category) e) Total (a+b+c+d) |
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| Details of acquisition
a) Shares carrying voting rights acquired b) VRs acquired otherwise than by equity shares |
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| c) Warrants/convertible securities/any other instrument that entitles the acquirer to receive shares carrying category) acquired
d) Shares in the nature of encumbrance (pledge/ lien/ non-disposal undertaking/ others) e) Total (a+b+c+/-d) |
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| After the acquisition, holding of acquirer along with PACs of:
a) Shares carrying voting rights b) VRs otherwise than by equity shares c) Warrants/convertible securities/any other instrument that entitles the acquirer to receive shares carrying voting rights in the TC (specify holding in each category) after acquisition d) Shares in the nature of encumbrance (pledge/ lien/ non-disposal undertaking/ others) e) Total (a+b+c+d) |
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| Mode of acquisition (e.g. open market / public issue / rights issue / preferential allotment / inter-se transfer/encumbrance, etc.) | |||
| Salient features of the securities acquired including time till redemption, ratio at which it can be converted into equity shares, etc. | |||
| Date of acquisition of/ date of receipt of intimation of allotment of shares / VR/ warrants /convertible securities/any other instrument that entitles the acquirer to receive shares in the TC. | |||
| Equity share capital / total voting capital of the TC before the said acquisition | |||
| Equity share capital/ total voting capital of the TC after the said acquisition | |||
| Total diluted share/voting capital of the TC after the said acquisition | |||
Part-B***
Name of the Target Company:
| Name(s) of the acquirer and Persons Acting in Concert (PAC) with the acquirer | Whether the acquirer belongs to Promoter/ Promoter group | PAN of the acquirer and/ or PACs |
Signature of the acquirer / Authorized Signatory Place:
Date:
Note:
(*) Total share capital/ voting capital to be taken as per the latest filing done by the company to the Stock Exchange under Clause 35 of the listing Agreement.
(**) Diluted share/voting capital means the total number of shares in the TC assuming full conversion of the outstanding convertible securities/warrants into equity shares of the TC.
(***) Part-B shall be disclosed to the Stock Exchanges but shall not be disseminated.
Annexure B
Format for disclosures under Regulation 29(2) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
| Name of the Target Company (TC) | |||
| Name(s) of the acquirer and Persons Acting in Concert (PAC) with the acquirer | |||
| Whether the acquirer belongs to Promoter/Promoter group | |||
| Name(s) of the Stock Exchange(s) where the shares of TC are Listed | |||
| Details of the acquisition / disposal as follows | Number | % w.r.t. total share/voting capital wherever applicable (*) | % w.r.t. total diluted share/voting capital of the TC (**) |
| Before the acquisition under consideration, holding of:
a) Shares carrying voting rights b) Shares in the nature of encumbrance (pledge/ lien/ non-disposal undertaking/ others) c) Voting rights (VR) otherwise than by shares d) Warrants/convertible securities/any other instrument that entitles the acquirer to receive shares carrying voting rights in the T C (specify holding in each category) e) Total (a+b+c+d) |
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| Details of acquisition/sale
a) Shares carrying voting rights acquired/sold b) VRs acquired /sold otherwise than by shares c) Warrants/convertible securities/any other instrument that entitles the acquirer to receive shares carrying voting rights in the TC (specify holding in each category) acquired/sold d) Shares encumbered / invoked/released by the acquirer e) Total (a+b+c+/-d) |
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| After the acquisition/sale, holding of:
a) Shares carrying voting rights b) Shares encumbered with the acquirer c) VRs otherwise than by shares d) Warrants/convertible securities/any other instrument that entitles the acquirer to receive shares carrying voting rights in the TC (specify holding in each category) after acquisition e) Total (a+b+c+d) |
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| Mode of acquisition / sale (e.g. open market / off-market / public issue / rights issue / preferential allotment / inter-se transfer etc). | |||
| Date of acquisition / sale of shares / VR or date of receipt of intimation of allotment of shares, whichever is applicable | |||
| Equity share capital / total voting capital of the TC before the said acquisition / sale | |||
| Equity share capital/ total voting capital of the TC after the said acquisition / sale | |||
| Total diluted share/voting capital of the TC after the said acquisition | |||
Signature of the acquirer / seller / Authorized Signatory
Place:
Date:
Notes:
(*) Total share capital/ voting capital to be taken as per the latest filing done by the company to the Stock Exchange under Clause 35 of the listing Agreement.
(**) Diluted share/voting capital means the total number of shares in the TC assuming full conversion of the outstanding convertible securities/warrants into equity shares of the TC.
Conclusion: In conclusion, Regulation 29 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, plays a pivotal role in maintaining transparency in the acquisition and disposal of shares in target companies. By mandating timely disclosures, SEBI ensures that all market participants are well-informed, thereby fostering a fair and efficient securities market. Compliance with these regulations is not only a legal obligation but also a crucial aspect of responsible investing and corporate governance.
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The contents published here has been an extract of SEBI (SAST) Regulation, 2011 and its explanation form an individual point of view, it does not constitute any legal opinion.
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