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Article chartered secretary final
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2. The concept of voluntary open offer has been separately dealt in the draft Regulations submitted by the Committee.
3. In case of voluntary open offer, the offer size may be of 10% or more of the voting rights at the will of the Acquirer. The rationale of this option of lower size offer is that the purpose of offer is just consolidation of holding and no one is being given preferred treatment as in case of transfer of shares or control.
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5. proportionately reduce the number of shares acquired under the open offer and under any agreement that attracted the obligation to make such open offer, other than shares acquired by way of allotment by the target company, such that the holding of the acquirer and persons acting in concert does not exceed the maximum permissible non-public shareholding.
7. In the proposed Regulations, the exemption from open offer available in case of change in control without acquisition of substantial shares, through a special resolution by postal ballot process, has been withdrawn and now the only route available for change in management and control is through the Open Offer to the shareholders of the Target Company. This is in contrast with the Regulation 12 of the existing SEBI Takeover Regulations which provides for the change in control through the special resolution passed by way of postal ballot.
8. The committee has withdrawn this exemption of change in control through special resolution keeping in view the fact that the New Draft Takeover Regulations allows for the acquisition of 24.99% shares in the company with triggering the obligation to make the open offer which is a substantial percentage and thus allowing the exemption will help the new acquirer to acquire the substantial shares and control without providing the exit opportunity to the shareholders of the Target Company.
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11. The Committee is of the view that more flexible norms for grant of loans for strategic investment in Indian listed companies particularly for funding open offers under SEBI Takeover Regulations should be prescribed so as to create a level playing for domestic acquirers’ vis-à-vis foreign acquirers for speedy deal execution.
12. SEBI for changes in ICDRIn order to ensure that issuance of shares as a consideration for the shares tendered in the Open Offer does not lead to undue delay in completion of offer formalities by the acquirer, therefore, the committee has suggested that SEBI should amend the ICDR Regulations to facilitate a smooth issuance of equity shares in such cases in a clear and transparent manner and further, the disclosures and other procedural requirements to be followed for such issue of shares should be appropriately spelt out. <br />Conclusion:<br />Based on these deliberations, it can be concluded that the Committee has tried to make takeover battles a level playing field for controlling as well as non-controlling shareholders. The increase in threshold would make listed companies more attractive to institutional investors and consequently would lead to more Investment in Indian Listed Companies. On the other hand it may reduce the number of offers as even 25% stake could be sufficient to control a company keeping in view the passive nature of small shareholders. The 100% offer requirement is good for the cause of equity but might also cause deterrent for acquisitions, which is a major concern. The increase in the offer size upto 100% has made the Open Offer process a costlier affair for the acquirers. The Committee has also made attempts to address many of the unintentional confusions and non-clarities and make the takeover law less complicated in understanding and compliance. The India Inc. will look forward to an early implementation of these new Regulations with some further modifications as per the comments and suggestions of industry chambers, professional bodies and public at large. <br />For any query feel free to refer www.takeovercode.com or write to pkvijay@indiacp.com <br />