SEBI Takeover Code – Acquisition under Regulation under 11(1) & second proviso of 11(2) can be done in the same financial year

[CS.Alagar]

Dear All,

This information may be useful for many of you.

 

As per present SEBI Takeover Code, the promoters or investors can consolidate their shareholding / voting rights in the listed Company under Regulation 11(1) & 11(2).

 

According to Regulation 11(1) when the promoters or investors are holding 15% or more and not exceeding 55%, they can consolidate the shareholding by way of 5% creeping acquisition in every financial year without going for an open offer.

Similarly, the promoters or investors can further increase their shareholding by 5% by way of purchase from open market in normal segment on the stock exchange pursuant to second proviso of Regulation 11(2). This is one time exemption.

 

When the promoter is holding in the range of 50 to 55%, whether he can invoke both regulation 11(1) and 11(2) proviso in the same financial year ?

 

Yes, both the regulation 11(1) and 11(2)  are two independent and distinct regulations. The promoters can consolidate their shareholding by invoking regulation 11(1) and 11(2) as well in the same financial year.

 

The above interpretation has been confirmed by the SEBI  vide its letter dated February 07, 2011 under SEBI (Informal Guidance) Scheme in the case of Cera Sanitarware Ltd. Brief background of the issue appended below.

 

Cera Sanitarware Ltd has made an application to the SEBI under the SEBI (Informal Guidance) Scheme 2003 seeking clarification on Regulation 11(1) and 11(2) of the SEBI Takeover Code.

 

In this instant case the promoters are holding 53.70% and desirous to increase the shareholding to 55% under Regulation 11(1) by way of creeping acquition during the finanncial year 2010-11.

 

Also, the promoters desirous to further increase their holding by 5% by way of purchase from open market in normal segment on the stock excahnge pursuant to second proviso of Regulation 11(2) during the same financial year 2010-11.

 

"SEBI in its reply says that upon acquisition of 1.70% under the regulation 11(1), the promoters would reach 55% threshold and hence become eligible for the one time exemption provided by second proviso to regulation 11(2). In terms of said proviso, the promoters may acquire further 5% voting rights by way of purchase from open market in normal segment on the stock exchange. The aforesaid acquisitions would be governed by two separate distinct regulations. Hence,both the transactions can be undertaken in the same financial year"

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Thanks & Regards
CS.M.Alagar, B.Com.,ACS.,LLB.
Team Genicon
Genicon Business Solutions Pvt.Ltd
Mylapore, Chennai - 600 004
Tel:044-4208 8484
Mobile: 91-9003199947
email:ala...@geniconsolutions.com
web:www.geniconsolutions.com

[ankit das]

Thank you for the information...

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Ankit Das

Mob: +91-9701891816

[padma loya]

Hello Sir,

Thank you so much for the information.  I was undergoing the same confusion at present.  Thanks for the same.

Regards,
Padma

[R V SECKAR]

Dear Mr. Alagar ,

Thanks for your value based information on acquisition by promoters of a listed company.

Regards

R.V.Seckar

Pl do visit my blogs :

http://www.rvseckarcompanylaw.blogspot.com/

http://rvseckarfema.blogspot.com/

http://rvseckarindianlaws.blogspot.com

[Rame Gowda C G]

Dear Sir,

 

I didnt get the This is one time exemption.

 

Just clarify me that  whether this exemption is for the financial year ended 31 March or  only once in the life time of the company.

 

if the promoter had acquied    2 % of the shares  of the Company in the month of june 2009. will the same promoter  can acquire further  4 % of shares  for the fy  31st march 2011.

 

  

Regards

Rama

On Thu, Feb 10, 2011 at 2:04 PM, CS.Alagar <alag...@gmail.com> wrote:

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Thanks & Regards
Rame Gowda .C.G
9731107221