Substantial Acquisition of Shares

Acquisition of 15% or more of shares

No acquirer can acquire 15% or more of voting rights
in company, unless such acquirer makes a public
announcement.

Acquisition by person having more than 15% but less
than 55%
Acquirer is allowed to purchase additional shares or
voting rights of up to 5% per financial year without
making a public announcement of an open offer.

Acquisition by person having more than 55% but less
than 75%
Acquirers holding from 55% to 75% shares were
required to make such public announcement for any
additional purchase of shares

Procedure Involved in Takeover
Appointment of Merchant Bank
The acquirer need to appoint a Category 1 merchant
banker
Public Announcement of Offer
The announcement of offer is made by merchant bank by
publishing it in newspaper.
Public announcement must contain the offer price,
number of shares to be acquired from the public, identify
of acquires purpose, future plans in respect of target
company, period with in which offer would be
completed.

Submission of Letter of Offer to SEBI
Within 14 days of public announcement, acquirer
must file draft letter of offer along with filling fees of
50,000/-.
Offer Price
While determining minimum offer price, the acquirer
in consultation with merchant bankers to take into
consideration various parameters.
Dispatch of Letter of Credit to Shareholders

Competitive Bid
Any person can make a competitive public
announcement within 21 days of first public
announcement.
Upward Revision of Offer
Acquirer may make upward revisions in his offer in
respect to the price and number of shares to be
acquired.
Acquirer need to make public announcement in all
newspapers in which original announcement was
made and need to inform SEBI, stock exchange and
target company.
Withdrawal of Offer
No public offer can be withdrawn expect under
following circumstances:
(i) statutory approvals are refused
(ii) sole acquirer has died
(iii) circumstances in opinion of SEBI
Provision of Escrow
every acquirer must create an Escrow Account of
25% of the consideration for offer sizes less than
Rs.100 Crores and 10% for the excess consideration
above Rs.100 Crores.

Penalties
Any person violating any provisions of the
Regulations shall be liable for action in terms of the
Regulations and the SEBI Act.
The penalties may be
(i) forfeiture of the escrow account
(ii) directing the person concerned to sell the shares
acquired in violation of the regulations and not to
further deal in securities
(iii) Levy of monetary penalties


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