Substantial Acquisition of shares, Voting Rights or Control under SEBI (SAST) Regulations, 2011
Substantial Acquisition of shares voting rights
1. Regulation 3(1)
No acquirer, in any target company, shall a acquire shares or voting rights which taken together with shares or voting rights, if any, held by him and any PAC in such target company, which entitled them to exercise 25% or more of the voting rights in such target company unless acquirer makes a Public announcement of an open offer for acquiring shares of such target company.
2. Regulation 3(2)
No acquirer, together with PAC with him, in target company, has acquired and holds shares and voting rights, which entitled them to exercise 25% or more of the voting right but less than 75% i.e maximum permissible non-public shareholding shall acquire within any financial year addition shares or voting rights, entitled them to exercise 5% of the voting right unless the acquirer makes a Public announcement of an open offer for acquiring shares of such target company.
3. Proviso to Regulation 3(2)
Acquirer shall not be entitled to acquire or enter into any agreement to acquire share or voting rights exceeding such no. of shares as would be take aggregate shareholding above the 75% i.e maximum permissible non-public shareholding.
4. Gross Acquisition
While determining the quantum of acquisition of additional voting rights, gross acquisition shall be taken into account irrespective of any intermittent fall in shareholding or voting right whether due to disposed of shares held or decrease in the voting rights due to fresh issue of shares by the target company.
5. Pre & Post allotment percentage
While determining the quantum of acquisition of additional voting rights, Where any shares acquires by the acquirer for any allotment of shares by the Target company in any financial year then the difference between the Pre allotment percentage and Post allotment percentage shall be considered.
6. Regulation 3(3)
Acquisition of shares by any person, such that the individual shareholding of such person exceeds the maximum limits, shall also be attracting the obligations to make public offer for acquiring shares of the target company irrespective of the whether there is a change in the aggregate shareholding with PAC.
7. Non-Applicability of Regulation 3
In case if the acquisition of shares or voting rights of the company by the promoters or shareholders in control, as per the Chapter VI-A of SEBI (ICDR) Regulations 2009.
Acquisition of Control
8. Regulation 4
Unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations, no acquirer shall acquire directly or indirectly, control over such target company shares of such target Company.
9. Regulation 5(1)
Acquisition of shares or voting right or control over, by any company or other by other entity, that enable any person or PAC with him to exercise or direct the exercise of such percentage as prescribed in regulation 3 or Control under regulation 4, target company, the acquisition of which otherwise attract the obligation to make a Public announcement of an open offer, shall be considered as an Indirect acquisition of shares or voting rights or control over the target company.
10. Regulation 5(2)
In case of an indirect acquisition attracting the provisions of sub-regulation (1)
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.
In excess of the 80% on the basis of most recent audited annual financial statements, such indirect acquisition shall be considered as direct acquisition of the target company for all purpose of these regulations.
11. 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 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.
Delisting Offer
12. Regulation 5A (1)
In event if the acquirer make a public announcement of an open offer under regulation 3, 4, 5 then he may delist the Company in accordance with the provision of SEBI (Delisting of equity shares) Regulations, 2009.
He shall declare on upfront his intention to delist at the time of making detailed public announcement.
13. Regulation 5A (2)
Where offer made under sub- regulation (1) is not successful, then the acquirer make a public announcement within 2 working days in respect of such failure in all the newspaper.
14. Regulation 5A(3)
In case of the failure of the delisting offer, the acquirer through the manager to the open offer, shall within 5 working days from the date of PA, file with the Board a draft letter of offer as specified in regulation 16.
In this case Offer price shall stand enhanced at rate of 10% p.a between the scheduled date of payment of consideration to the shareholder and the actual date of payment
Voluntary Offer
15. Regulation 6(1)
An acquirer together with PAC, holds shares, voting rights in a target company entitled them to exercise 25% or more but less than 75% i.e maximum permissible non public shareholding shall be entitled to voluntary to make a PA of an open offer for acquiring share in the target company, provided the agreegate shareholding shall not exceed the 75% maximum permissible non public shareholding.
16. 1st Proviso to the regulation 6(1)
In case if an acquirer or any PAC with him has acquired shares of target company in last 52 weeks without attracting the obligation to make PA of an open offer then he shall not be eligible to voluntary make a PA of an open offer for acquiring shares.
17. 2nd Proviso to regulation 6(1)
During the offer period he shall not be entitled to acquire any share other than share acquire in open offer.
18. Regulation 6(2)
An acquirer who made a PA under this regulation to acquire share of the target company shall not be entitled to acquire any shares of the target company for a period of 6 Months after the completion of the open offer.
19. Regulation 6(3)
Shares acquired through bonus issue or stock splits shall not be considered for purposes of the dis-entitlement.
20. Regulation 6A
No person who is a willful defaulter shall make a public announcement of an open offer for acquiring shares or enter into any transaction that would attract the obligation to make a public announcement of an open offer for acquiring shares under these regulations.
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