Takeover Code – amendments

SEBI has vide its notification dated 5th May, 2021 amended the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations 2011 or the Takeover Code. The following are the amendments carried out.

Regulation 3(1) stipulates that no acquirer shall acquire shares or voting rights in a target company in excess of 25% of the voting rights without making an open offer for acquiring the remaining shares in the target company. Sub Regulation (5) has been added which stipulates that for shares listed in Innovators Growth Platform, the said percentage will be 49%.

Same change has been made in regulation 6, which refers to voluntary offer wherein for 25%, 49% has been stipulated for shares listed in the Innovators Growth Platform.

Regulation 26 pertains to obligations of the target company. Sub regulation (6) specifies that the Board of Directors of the target company shall constitute a committee of independent directors to provide reasoned recommendations on such open offer and the target company shall publish such recommendations. A proviso has been added that while providing reasoned recommendations on the open offer proposal, the committee shall disclose the voting pattern of the meeting in which the open offer proposal was discussed.

Basically it means when the committee of independent directors meet to consider the open offer proposal and draft their reasoned recommendations, the voting pattern of such meeting shall be disclosed.

Regulation 29 pertains to disclosure of acquisition and disposal. It stipulates for disclosure of shareholding and voting rights in the target company aggregating to 5% or more of the shares of such target company. The amendment is that in case of securities listed in the Innovators Growth Platform, this percentage to be read as 10%.

In the case of creeping acquisition, shareholders holding 5% or more shares in a company, shall disclose any change in shareholding exceeding 2% of the total shareholding in the target company. In case of securities listed in Innovators Growth Platform, this percentage to be read as 10% and 5% respectively.

The amendments can be found at sebi site. i.e. http://www.sebi.gov.in

Leave a comment

Filed under securities laws

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s