14th MSOP Batch: Project Presentation

The New Takeover Code, 2011

Group Members 14th MSOP Batch: Project Presentation Hiral Patel Sharmin Patel Uday Sohoni Ganesh Ithape Ashwini Vartak .

2011 (The New Takeover Code. 1997 Transition to the New Takeover Code. 2011 SEBI (Substantial Acquisition of Shares and Takeover) Guidelines. 2011)  Impact on Industry .Contents:   14th MSOP Batch: Project Presentation    Introduction Background of Takeover Regulations SEBI (Substantial Acquisition of Shares and Takeover) Guidelines.

either directly by becoming the owner of those assets or indirectly by obtaining control of the management of the company. party or organization  . What does “Code” mean? A set of rules outlining the responsibilities of or proper practices for an individual.Introduction 14th MSOP Batch: Project Presentation  What is Takeover? Takeover signifies a transaction or a series of transactions whereby a person acquires control over the assets of a company.

N. 14th MSOP Batch: Project Presentation The laws relating to takeovers in India where not very organized until the year 1994. The guidelines of the Securities and Exchange board of India (Substantial acquisition of shares and takeover). regarding acquisition of the shares of dissentient shareholders) there was hardly anything solid enough to be called as organized takeover laws. regarding inter-corporate loans by Companies and Section 395. Bhagwati was constituted to review the regulations and suggest the necessary changes required under the act. 1956 (Section 372.Background   Except for certain provisions of the Companies Act. The regulations were amended in 1997 and they finally were implemented. .   A need was certain changes in the regulation had been felt and so a committee under the chairmanship of Justice P. Since then the regulations have been known as the TAKEOVER CODE. 1994 was a maiden Indian attempt towards an organized set of laws for regulating takeovers in India.

1997 14th MSOP Batch: Project Presentation .SEBI (Substantial Acquisition of Shares and Takeover) Guidelines.

. a listed company.Important Provisions of the Takeover Code.e. nor has it been defined in any other related Acts. 1997: Substantial Acquisition: Substantial acquisition as such has not been defined under the regulations. if we read through regulations 10 and 11 of the code. 1997 was to regulate in an organized manner the substantial acquisition of shares and takeovers of a company whose shares are quoted on a stock exchange i. the question as to what constitutes substantial acquisition is made relatively very clear. Nevertheless. 14th MSOP Batch: Project Presentation The objective of the Takeover Code.

additional acquisition by 5% in a financial year without making a public announcement From 55% to 75% . (c) Regulation 12:  No requirement to make an open offer to any change in control which takes place pursuant to a special resolution passed by the shareholders in a General Meeting.(a) Regulation 10:   (b) Regulation 11 (Creeping Acquisition):   From 15% to 55% .Public announcement required in case of additional acquisition Public Announcement: To acquire a minimum of 20% of the voting capital of the target company from the existing shareholders by means of an open offer. 14th MSOP Batch: Project Presentation Threshold limit of 15% To make a public announcement for an open offer if shares acquired beyond the threshold limit .

Transition to the New Takeover Code. 2011 14th MSOP Batch: Project Presentation .

 These Regulations had then been released by SEBI for Public comments from July 19. 14th MSOP Batch: Project Presentation  The New Takeover Code was the brainchild of the Takeover Regulations Advisory Committee (TRAC) constituted under the Chairmanship of Shri. 2011. had considered the report of TRAC and had then.   . C. 1997 formed under the guidance of the Justice P. Achuthan. 2010. Bhave on July 19. 2010. 2011. notified SEBI (SAST) Regulations. B. Finally. Securities Appellate Tribunal – Chairman. the New Code came into force on October 22. on 23 September 2011. also known as the New Takeover Code. who submitted its report to SEBI Chairman Shri. 2010 to August 31. Former Presiding Officer. N. Bhagwati remained in force for a period of almost 13 years. The SEBI (SAST) Guidelines. SEBI at their Board Meeting held on July 28. 2011. C.

14th MSOP Batch: Project Presentation The New Takeover Code. 2011 .

HIGHLIGHTS        Increase in Initial Threshold Limit from 15% to 25% Creeping Acquisition Limit raised from 15%-55% to 25%-75% Abolition of Non-compete fees Definition of “Control” modified Deletion of Regulation 12 of the Old Takeover Code. 1997 Voluntary Open Offer • Eligibility • Conditions • Restrictions  Detailed provisions relating to Indirect Acquisitions   Provisions introduced relating to Recommendation on Open Offer by the Board of Target Company Reduction in timeline for completion of open offer (95 calendar days to 57 business days) 14th MSOP Batch: Project Presentation Increase in Offer Size from 20% to 26% .

Impact on Industry & the way forward ! 14th MSOP Batch: Project Presentation .

. which came into force on October 22.  Increase in the Offer size which means exit opportunity to all the ..  Lesser number of Hostile Takeover Attempts.  Balance Interest of all stakeholders.. at 26 per cent 14th MSOP Batch: Project Presentation .The impact of the New Takeover Code. on the Indian industry can be analysed by evaluating the positive and negative comments as offered by eminent professionals on the same describing its features and its effects on the field of commerce and industry.shareholders. .. acquirer.  a level playing field created for Indian acquirers by fixing the open offer size ..  More Stringent and frequent disclosure requirement on the part of the  Clarity in Provisions.. 2011.

bad and ugly. But what is certain is that the Indian takeovers scene is set to see a lot of action .the Company.acquisitions. As always. attempted to juggle the interest of all stakeholders and strike a balance that is not very easy to achieve. 14th MSOP Batch: Project Presentation  Disruptive Shareholders intention to block substantial shareholding in . .. the market reaction seems to be mixed ranging from excitement to displeasure.  Effect on Promoter Holdings in the Company..... Too Expensive for Indian Promoters due to insufficient bank funds for . SEBI has carefully ..good. Evidently.

Impact on Industry & the way forward ! 14th MSOP Batch: Project Presentation .

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