SEBI TAKEOVER CODE

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MODULE OUTLINE
• History and evolution of Takeover Regulations
• SEBI (Substantial Acquisition of Shares & Takeover)
Regulations, 2011 (Takeover Code): Salient regulatory
provisions
• Open Offer Process
• Indirect Acquisition, Creeping Acquisition
• Conditional Offers, Competing Offers

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SEBI (SUBSTANTIAL
ACQUISITION OF SHARES &
TAKEOVER) REGULATIONS,
2011
Came into Force : 22 October 2011
Repealed SAST Regulations, 1997
Takeover Regulations Advisory Committee (“TRAC”) was
formed under the chairmanship of Late C. Achuthan
SEBI (Substantial Acquisition of Shares & Takeover)
Regulations, 2011

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HISTORICAL EVOLUTION IN
BRIEF
The SEBI Act, 1992 expressly mandated SEBI to regulate substantial
acquisition of shares and takeovers by suitable measures. Accordingly,
SEBI provided a legal framework by making the Takeover Regulations of
1994, which came into force on November 4, 1994.
Bhagwati Committee - 1997 ; SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997
2009: TRAC constituted – Takeover Regulations Advisory Committee
• 19 July 2010: TRAC released its report
• 28 July 2011: The SEBI Board considered TRAC recommendations
• 23 September 2011: SEBI notified the new Takeover Code
• 22 October 2011: The new Takeover Code effective

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 SEBI (SUBSTANTIAL ACQUISITION OF SHARES & TAKEOVER)
REGULATIONS, 2011

Takeover of companies whose securities are listed on one or more

recognized stock exchanges in India is regulated by the Securities
and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011.
WHAT IS TAKEOVER?
The term ‘Takeover’ has not been defined under the said
Regulations; the term basically envisages the concept of an acquirer
acquiring shares with an intention of taking over the control or
management of the target company. When an acquirer, acquires
substantial quantity of shares or voting rights of the target company,
it results in the substantial acquisition of shares

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 PURPOSE OF TAKEOVER
REGULATIONS ?
Example: Mr. A, prominent shareholder in Company XYZ, Many small investors in
XYZ
Mr. B – Acquirer – enters into agreement with Mr. A for purchase of his
shareholding
Mr. B buys shares at a particular rate from Mr. A
Share price starts falling – Small investors stuck

To ensure Fair Exit Opportunity for the shareholders

To ensure Fair Play in Exit Opportunity; and
To ensure Fair Disclosure about the change in
shareholding & control in the Company.
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PURPOSE OF SEBI
REGULATIONS
The SEBI Regulations prescribed a systematic framework for
acquisition of stake in listed companies, thereby ensuring that
the interests of the shareholders are not compromised, and
they are treated fairly and equitably and also ensuring that
they are mandatorily offered an honourable exit opportunity in
case of a substantial acquisition in, or change in control of, a
listed company..

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OBJECTIVES OF THE
REGULATIONS AS PER TRAC
a) To provide a transparent legal framework for facilitating takeover
activities;
(b) To protect the interests of investors in securities and the
securities market, taking into account that both the acquirer and the
other shareholders or investors and need a fair, equitable and
transparent framework to protect their interests;
(c) To balance the various, and at times, conflicting objectives and
interests of various stakeholders in the context of substantial
acquisition of shares in, and takeovers of, listed companies.
(d) To provide each shareholder an opportunity to exit his investment

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e) To provide acquirers with a transparent legal framework to acquire
shares in or control of the target company and to make an open offer;
(f) To ensure that the affairs of the target company are conducted in the
ordinary course when a target company is subject matter of an open
offer;
(g) To ensure that fair and accurate disclosure of all material information
is made by persons responsible for making them to various
stakeholders to enable them to take informed decisions;
(h) To regulate and provide for fair and effective competition among
acquirers desirous of taking over the same target company; and
(i) To ensure that only those acquirers who are capable of actually
fulfilling their obligations under the Takeover Regulations make open
offers."

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ACQUIRER AND
ACQUISITION
Acquirer [Regulation 2(1)(a)] “Acquirer” means any person who,
directly or indirectly, acquires or agrees to acquire whether by
himself, or through, or with persons acting in concert with him,
shares or voting rights in, or control over a target company;
Acquisition [Regulation 2(1)(b)] “Acquisition” means, directly or
indirectly, acquiring or agreeing to acquire shares or voting rights
in, or control over, a target company
It means that agreement to acquire the share or voting or control in
a listed company without actual acquisition of share will also be
treated as acquisition for the purpose of SEBI Takeover Regulations,
2011

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PERSON ACTING IN
CONCERT
Persons Acting in Concert (Regulation 2(1)(q)) Persons Acting in Concert
means persons who, with a common objective or purpose of acquisition of
shares or voting rights in, or exercising control over a target company,
pursuant to an agreement or understanding, formal or informal, directly or
indirectly co-operate for acquisition of shares or voting rights in, or
exercise of control over the target company.
observations of Justice Bhagwati Committee made in its report dated
January 18, 1997, wherein it is stated that - "To be acting in concert with
an acquirer, persons must fulfil certain "bright line" tests. They must have
commonality of objectives and a community of interests which could be
acquisition of shares or voting rights beyond the threshold limit, or gaining
control over the company and their act of acquiring the shares or voting
rights in a company must serve this common objective. Implicit in the
concerted action of these persons must be an element of cooperation.
And as has been observed, this cooperation could be extended in several
ways, directly or indirectly, or through an agreement - formal or informal." 11
PERSONS DEEMED TO BE
ACTING IN CONCERT
The persons falling within the following categories shall be deemed
to be persons acting in concert with other persons within the same
category, unless the contrary is established,—
(i) a company, its holding company, subsidiary company and any
company under the same management or control;
(ii) a company, its directors, and any person entrusted with the
management of the company;
(iii) directors of companies referred to in item (i) and (ii) of this sub-
clause and associates of such directors;
(iv) promoters and members of the promoter group

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PERSONS DEEMED TO BE
ACTING IN CONCERT
(v) immediate relatives;
(vi) a mutual fund, its sponsor, trustees, trustee company, and
asset management company;
(vii) a collective investment scheme and its collective investment
management company, trustees and trustee company;
(viii) a venture capital fund and its sponsor, trustees, trustee
company and asset management company;
(x) a merchant banker and its client, who is an acquirer;
(xi) a portfolio manager and its client, who is an acquirer;

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PERSONS DEEMED TO BE
ACTING IN CONCERT
(xii) banks, financial advisors and stock brokers of the acquirer, or of any
company which is a holding company or subsidiary of the acquirer, and
where the acquirer is an individual, of the immediate relative of such
individual:
Provided that this sub-clause shall not apply to a bank whose sole role is
that of providing normal commercial banking services or activities in
relation to an open offer under these regulations;
(xiii)an investment company or fund and any person who has an interest in
such investment company or fund as a shareholder or unitholder having
not less than 10 per cent of the paid-up capital of the investment company
or unit capital of the fund, and any other investment company or fund in
which such person or his associate holds not less than 10 per cent of the
paid-up capital of that investment company or unit capital of that fund:
Provided that nothing contained in this sub-clause shall apply to holding of
units of mutual funds registered with the Board;
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PERSONS DEEMED TO BE
ACTING IN CONCERT
Explanation.— For the purposes of this clause “associate” of a
person means,—
(a) any immediate relative of such person;
(b) trusts of which such person or his immediate relative is a
trustee
(c) partnership firm in which such person or his immediate
relative is a partner; and
(d) members of Hindu undivided families of which such
person is a coparcener;

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TARGET COMPANY
Regulation 2 (z) “target company” means a company
and includes a body corporate or corporation
established under a Central legislation, State
legislation or Provincial legislation for the time being
in force, whose shares are listed on a stock exchange

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CONTROL
e) “control” includes the right to appoint majority of the
directors or to control the management or policy decisions
exercisable by a person or persons acting individually or in
concert, directly or indirectly, including by virtue of their
shareholding or management rights or shareholders
agreements or voting agreements or in any other manner:
Provided that a director or officer of a target company shall
not be considered to be in control over such target company,
merely by virtue of holding such position

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TRIGGER POINTS
By trigger points, we mean the threshold levels upon
reaching which, an acquirer, either on its own individual
account or along with Persons Acting in Concert (PAC)
acquiring shares or voting rights in a target company is
required to make a public announcement for an open offer
and comply with the other provisions of the Takeover Code
with regard to an open offer.
These threshold levels are set in Regulation 3 of the SEBI
(SAST) Regulations, 2011.

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 TRIGGER POINTS UNDER
SEBI REGULATION 3
Acquirer along with PAC – 25% of shares or voting right

Initial Trigger is at the acquisition of 25% or more of the shares or voting

rights of the Target Company.

 The threshold limit is to be checked individually for Acquirer as well as

collectively for the Acquirer + PACs.

 Shares already held by the Acquirer shall also be considered for

calculation of 25% limit.

 Shareholding of Acquirer as well as PAC is to be considered for the

purpose of calculating the limit of 25% of the voting rights. 19
3. SUBSTANTIAL
ACQUISITION OF SHARES OR
VOTING RIGHTS.
(1) No acquirer shall acquire shares or voting rights
in a target company which taken together with
shares or voting rights, if any, held by him and by
persons acting in concert with him in such target
company, entitle them to exercise twenty-five per
cent or more of the voting rights in such target
company unless the acquirer makes a public
announcement of an open offer for acquiring shares
of such target company in accordance with these
regulations.
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Initial Trigger – Individually

Whether Regulation 3(1) triggered?

Acquires
Mr. A holds 10%
additional 15%
of the voting
or more of the
rights in the
voting rights in
Company
the Company
Initial Trigger – Individually

Whether Regulation 3(1) triggered?

Acquires
Mr. A holds 10%
additional 15%
of the voting Triggers
or more of the
rights in the Regulation 3(1)
voting rights in
Company
the Company
Initial Trigger – Individually

Whether Regulation 3(1) triggered?

Acquires 25% or
Mr. A doesn’t
more of the
hold any shares
voting rights in
in the Company
the Company
Initial Trigger – Individually

When Regulation 3(1) triggered?

Acquires 25% or
Mr. A doesn’t
more of the Triggers
hold any shares
voting rights in Regulation 3(1)
in the Company
the Company
Initial Trigger – Collectively with PACs

Whether Regulation 3(1) triggered?

Mr. A holds 10% of
the voting rights in
Mr. A acquires
the Company and
additional 5% of the
spouse of Mr. A i.e.
voting rights in the
Mrs. B holds 10% of
Company
the voting rights in
the Company
Initial Trigger – Collectively with PACs

Whether Regulation 3(1) triggered?

Mr. A holds 10% of
the voting rights in
Mr. A acquires
the Company and
additional 5% of the Triggers Regulation
spouse of Mr. A i.e.
voting rights in the 3(1)
Mrs. B holds 10% of
Company
the voting rights in
the Company
 L N T AND MINDTREE ACQUISITION

V G Siddhartha, Chairman of Café Coffee Day who is the single largest non-promoter
shareholder with a 20.32% stake in Mindtree. Faced with liquidity pressures, he
approached Larsen & Turbo (L&T), for the purchase of his entire 20.32% stake in
Mindtree which offered a price in INR 980 per share equivalent to INR 3269 crores for
his entire shareholding

L&T acquired a 20 per cent stake in Bengaluru-based IT services company at Rs 980

per share (for a total of Rs 3,211 crore) from V G Siddhartha

L & T had to give an open offer since it would have crossed the threshold limit, Gave
an open offer of 31%
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CREEPING ACQUISITION
Acquirer along with PAC already holds 25% or more of the
voting rights but holds less than 75% of the voting rights;

Any acquisition of additional 5% or more of the voting rights

in any financial year.

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 3. SUBSTANTIAL ACQUISITION OF SHARES
OR VOTING RIGHTS.
(2) No acquirer, who together with persons acting in concert with
him, has acquired and holds in accordance with these regulations
shares or voting rights in a target company entitling them to
exercise twenty-five per cent or more of the voting rights in the
target company but less than the maximum permissible non-public
shareholding, shall acquire within any financial year additional
shares or voting rights in such target company entitling them to
exercise more than five per cent of the voting rights, unless the
acquirer makes a public announcement of an open offer for
acquiring shares of such target company in accordance with these
regulations:
Provided that such acquirer shall not be entitled to acquire or enter
into any agreement to acquire shares or voting rights exceeding
such number of shares as would take the aggregate shareholding
pursuant to the acquisition above the maximum permissible non- 29
Creeping Acquisition – Collectively with PACs

Whether Regulation 3(2) triggered?

Mr. A along with
person acting in
Mr. A along with
concert acquires
person acting in
additional 6% of
concert holds 30%
the voting rights in
of the voting rights
the Company in
one financial year
Creeping Acquisition – Collectively with PACs

Whether Regulation 3(2) triggered?

Mr. A along with
person acting in
Mr. A along with
concert acquires
person acting in Triggered
additional 6% of
concert holds 30% Regulation 3(2)
the voting rights in
of the voting rights
the Company in
one financial year
Creeping Acquisition – Collectively with PACs

When Regulation 3(2) triggers?

Mr. A along with person
Mr. A along with acting in concert enters
person acting in into an agreement to
acquire additional 5% of
concert holds 74% the voting rights in the
of the voting rights Company in one financial
year
Creeping Acquisition – Collectively with PACs

When Regulation 3(2) triggers?

Mr. A along with person As per the proviso of
Mr. A along with acting in concert enters Regulation 3(2), it is
person acting in into an agreement to stated that any Acquirer
acquire additional 5% of shall not acquire or agree
concert holds 74% the voting rights in the to acquire shares or
of the voting rights Company in one financial voting rights which
year exceeds the limit of 75%
CREEPING ACQUISITION –
EXAMPLE
A with existing shareholding 30% in 2019
FY- 2020-2021 – Acquire 3% - Triggered /Not Triggered?
FY- 2021-2022 – Acquire 3% - Triggered/ Not Triggered?
FY- 2022-2023 – Acquire 5 % - Triggered/Not Triggered?
FY – 2023-2024 – Acquires 3%+2%+1% - Triggered /Not
Triggered ?

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CREEPING ACQUISITION –
EXAMPLE
A with existing shareholding 30% in 2019
FY- 2020-2021 – Acquire 3% - Not Triggered
FY- 2021-2022 – Acquire 3% - Not Triggered
FY- 2022-2023 – Acquire 5 % - Not Triggered
FY – 2023-2024 – Acquires 3%+2%+1% - Triggered

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 HOW TO CALCULATE 5% OR MORE OF
THE VOTING RIGHTS?
Gross Acquisition alone shall be taken into consideration regardless of any
intermittent fall in the shareholding or voting rights whether owning to
disposal or dilution of voting rights owning to fresh issue of shares by the
Target Company;

In the case of acquisition of shares by way of issue of new shares by the
Target Company or where the Target Company has made an issue of new
shares in any given financial year, the difference between the pre-allotment
and the post-allotment percentage voting rights shall be regarded as the
quantum of additional acquisition. 36
3. SUBSTANTIAL
ACQUISITION OF SHARES OR
VOTINGFor RIGHTS.
Explanation.— purposes of determining the quantum of
acquisition of additional voting rights under this sub-regulation,—
(i) gross acquisitions alone shall be taken into account regardless of
any intermittent fall in shareholding or voting rights whether owing
to disposal of shares held or dilution of voting rights owing to fresh
issue of shares by the target company.
(ii) in the case of acquisition of shares by way of issue of new shares
by the target company or where the target company has made an
issue of new shares in any given financial year, the difference
between the pre-allotment and the post-allotment percentage voting
rights shall be regarded as the quantum of additional acquisition.

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3. SUBSTANTIAL
ACQUISITION OF SHARES OR
VOTING RIGHTS.
(3) For the purposes of sub-regulation (1) and sub-regulation
(2), acquisition of shares by any person, such that the
individual shareholding of such person acquiring shares
exceeds the stipulated thresholds, shall also be attracting the
obligation to make an open offer for acquiring shares of the
target company irrespective of whether there is a change in
the aggregate shareholding with persons acting in concert.
(5) For the purpose of this regulation, any reference to
“twenty-five per cent” in case of listed entity which has listed
its specified securities on Innovators Growth Platform shall be
read as “forty-nine per cent”.
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ACQUISITION OF CONTROL
4. Irrespective of acquisition or holding of shares or
voting rights in a target company, no acquirer shall
acquire, directly or indirectly, control over such
target company unless the acquirer makes a public
announcement of an open offer for acquiring shares
of such target company in accordance with these
regulations.

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INDIRECT ACQUISITION OF
SHARES OR CONTROL.
5. (1) For the purposes of regulation 3 and regulation 4, acquisition
of shares or voting rights in, or control over, any company or other
entity, that would enable any person and persons acting in concert
with him to exercise or direct the exercise of such percentage of
voting rights in, or control over, a target company, the acquisition
of which would otherwise attract the obligation to make a public
announcement of an open offer for acquiring shares under these
regulations, shall be considered as an indirect acquisition of shares
or voting rights in, or control over the target company.

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(2) Notwithstanding anything contained in these regulations, in the
case of an indirect acquisition attracting the provisions of sub-
regulation (1) where,—
(a) the proportionate net asset value of the target company as a
percentage of the consolidated net asset value of the entity or
business being acquired;
(b) the proportionate sales turnover of the target company as a
percentage of the consolidated sales turnover of the entity or
business being acquired; or
(c) the proportionate market capitalisation of the target company as
a percentage of the enterprise value for the entity or business being
acquired;
is in excess of eighty per cent, on the basis of the most recent
audited annual financial statements, such indirect acquisition shall
be regarded as a direct acquisition of the target company for all
purposes of these regulations including without limitation, the
obligations relating to timing, pricing and other compliance
requirements for the open offer. 41
Indirect Acquisition
Acquisition of voting rights or control over other entity that enable the
Acquirer to exercise of such percentage of voting or control over
Target Company.
• Enters in an agreement
Acquir to acquire 100% of Body
er Corporate
Acquirer indirectly
ABC • Already holds 74%
A/C of the voting rights triggers an Open
Offer for A Limited
A • Listed entity
Limite in India
d
DELISTING OFFER-
REGULATION 5A
in the event the acquirer makes a public announcement of an open
offer for acquiring shares or voting rights or control of a target
company in terms of sub regulation (1) of regulation 3, regulation 4
or regulation 5, the acquirer may seek the delisting of the target
company by making a delisting offer in accordance with this
regulation:
Provided that the acquirer shall have declared his intention to so
delist the target company at the time of making such public
announcement of an open offer

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(2) The delisting offer obligations shall be fulfilled by the acquirer in the following
manner: (a) the public announcement, the detailed public statement and the
letter of offer shall mention the open offer price determined in accordance with
regulation 8 of these regulations and the indicative price for delisting
Indicative price shall be in accordance with clause (o) of subregulation (1) of
regulation 2 of the Delisting Regulations 2021
(b) in case the response to the offer leads to the delisting threshold as provided
under regulation 21 of the Delisting Regulations : (i) being met, all shareholders
who tender their shares shall be paid the indicative price; (ii) not being met, all
shareholders who tender their shares shall be paid the open offer price.
(3) Where a delisting offer made under sub-regulation (1) is not successful: (a) on
account of the non–receipt of the prior approval of shareholders in terms of
regulation 11 of the Delisting Regulations; or (b) on account of non-receipt of the
prior in-principle approval of the relevant stock exchange in terms of regulation
12 of the Delisting Regulations; or (c) the threshold as specified under Regulation
21 of the Delisting Regulations is not achieved; the acquirer shall, within two
working days in respect of such failure, make an announcement in all the
newspapers in which the detailed public statement was made

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VOLUNTARY OFFER
6. (1) An acquirer, who together with persons acting in concert with
him, holds shares or voting rights in a target company entitling them
to exercise twenty-five per cent or more but less than the maximum
permissible non-public shareholding, shall be entitled to voluntarily
make a public announcement of an open offer for acquiring shares in
accordance with these regulations, subject to their aggregate
shareholding after completion of the open offer not exceeding the
maximum permissible nonpublic shareholding.
Provided that where an acquirer or any person acting in concert with
him has acquired shares of the target company in the preceding fifty-
two weeks without attracting the obligation to make a public
announcement of an open offer, he shall not be eligible to voluntarily
make a public announcement of an open offer for acquiring shares
under this regulation:

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VOLUNTARY OFFER
Provided further that during the offer period such acquirer shall not
be entitled to acquire any shares otherwise than under the open offer.
(2) An acquirer and persons acting in concert with him, who have
made a public announcement under this regulation to acquire shares
of a target company shall not be entitled to acquire any shares of the
target company for a period of six months after completion of the
open offer except pursuant to another voluntary open offer: Provided
that such restriction shall not prohibit the acquirer from making a
competing offer upon any other person making an open offer for
acquiring shares of the target company.

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FAQS
Voluntary offer can
be made in two
ways
such offers can be
made under
regulations 3(1),
3(2), or 4 without
the application of
the stringent
conditions under
regulation 6

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OPEN OFFER MADE BY LORGAN
LIFESTYLE LIMITEDTO ACQUIRE SHARES
OF SVC RESOURCES LIMITED (2014)
eligibility of the acquirer to make a public offer under regulations
3(1) and 4 of the Takeover Regulations
the Takeover Regulations are framed to regulate substantial
acquisition of shares/voting rights and acquisition of control in a
target company by an acquirer. Regulation 3 and 4 mandate open
offer by an acquirer if he breaches the limits mentioned therein and
if control is acquired. However, there could be situations where
proposed acquirers could make an open offer as they intend to
consolidate/increase their shareholding in a target company when
such post-offer shareholding is expected to be in excess of the
percentages mentioned under regulation 3 and/or regulation 4. An
open offer is an opportunity to an existing shareholder of a target
company to either exit or hold on to his shares in case any acquirer
wishes to acquire shares through means including open offers. 48
OPEN OFFER MADE BY LORGAN
LIFESTYLE LIMITED TO ACQUIRE SHARES
OF SVC RESOURCES LIMITED (2014)
if an acquirer wishes to make a full sized open offer, i.e., 26%, then the
Acquirer may choose to do so under regulation 3(1) or 3(2), as the case may
be. In the instant case, the holding of acquirer was less than 25%, therefore it
made a voluntary offer under regulation 3(1) of the Takeover Regulations
The scheme and framework of the Takeover Regulations is not to prevent an
open offer, especially one that is being made without compulsion on crossing
25% threshold or acquiring control. If such open offers are scuttled, the same
would only be prejudicial to the shareholders of a target company.
The question before me is whether SEBI can interpret its own regulations,
which it has done in the form of FAQs. I am of the opinion that it can and it
should, otherwise doubts raised about the effect of regulations would bring the
entire business to a halt. I am of the opinion that such interpretations are valid
so long as these are transparent and applied consistently without
discrimination.

49
WHO CANNOT MAKE A
OFFER
Regulation 6A states that notwithstanding anything contained in
these regulations, no person who is a wilful defaulter shall make a
public announcement of an open offer for acquiring shares or enter
into any transaction that would attract the obligation to make a
public announcement of an open offer for acquiring shares under
these regulations:
Provided that this regulation shall not prohibit the wilful defaulter
from making a competing offer
Regulation 6B states that notwithstanding anything contained in
these regulations, no person who is a fugitive economic offender
shall make a public announcement of an open offer or make a
competing offer for acquiring shares or enter into any transaction,
either directly or indirectly, for acquiring any shares or voting rights
or control of a target company.
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CONDITIONAL OFFER-
REGULATION 19
(1) An acquirer may make an open offer conditional as to the
minimum level of acceptance: Provided that where the open offer is
pursuant to an agreement, such agreement shall contain a
condition to the effect that in the event the desired level of
acceptance of the open offer is not received the acquirer shall not
acquire any shares under the open offer and the agreement
attracting the obligation to make the open offer shall stand
rescinded.
(2) Where an open offer is made conditional upon minimum level of
acceptances, the acquirer and persons acting in concert with him
shall not acquire, during the offer period, any shares in the target
company except under the open offer and any underlying
agreement for the sale of shares of the target company pursuant to
which the open offer is made.
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COMPETING OFFER –
REGULATION 20
When a public announcement for acquiring shares of a target
company in an open offer is made, any person, other than the
acquirer who has made such public announcement, shall be entitled
to make a public announcement of an open offer within fifteen
working days of the date of the detailed public statement made by the
acquirer who has made the first public announcement.
The competing open offer shall be for such number of shares which,
when taken together with shares held by such acquirer along with
persons acting in concert with him, shall be at least equal to the
holding of the acquirer who has made the first public announcement,
including the number of shares proposed to be acquired by him under
the offer and any underlying agreement for the sale of shares of the
target company pursuant to which the open offer is made
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COMPETING OFFER –
REGULATION 20
Unless the first open offer is a conditional offer, the competing offer
cannot be made conditional as to the minimum level of acceptance.
A competing offer is not regarded as a voluntary open offer and
therefore all the provisions of the Takeover Code, including that of
offer size, apply accordingly.
On Public Announcement of competing offer, an acquirer who has
made a preceding offer is allowed to revise the terms of his open
offer; if the terms are more beneficial to the shareholders of the
target company. The upward revision of the offer price can be made
any time up to three working days prior to commencement of the
tendering period.

53
WITHDRAWAL OF OPEN
OFFER-

REGULATION 23
Statutory approvals not obtained subject to such requirements for
approval having been specifically disclosed in the detailed public
statement and the letter of offer;
the acquirer, being a natural person, has died
any condition stipulated in the agreement for acquisition attracting the
obligation to make the open offer is not met for reasons outside the
reasonable control of the acquirer, and such agreement is rescinded,
subject to such conditions having been specifically disclosed in the
detailed public statement and the letter of offer;
such circumstances as in the opinion of the Board, merit withdrawal.
In the event of withdrawal of the open offer, the acquirer shall through
the manager to the open offer, within two working days- announce in
same newspapers; inform SEBI, stock exchanges etc.
54
What should be the Offer Size

7( at least
7( An
1) 26% of the
total
2) additional
10% of the
shares of voting
Target Co. rights of
Target Co. at least
26% of the
Mandatory Voluntary
total shares
Offer Offer
of Target
Co.
Offer Price – If Frequently traded & not traded
Highest price of the
Highest following:
Negotiated Price paid per share under
the Agreement - SPA
Volume-weighted average price for
acquisition made during 52 weeks
preceding date of PA
Highest price paid for acquisition made during 26
weeks preceding date of PA
Volume-weighted average market price for 60 trading
days preceding date of PA where the maximum
volume of trading in the shares of the target company
are recorded during such period,
where the shares are not frequently traded, the price
determined by the acquirer and the manager to the
open offer taking into account valuation parameters
including, book value, comparable trading multiples,
and such other parameters as are customary for
valuation of shares of such companies
 OFFER PRICE
Frequently Traded Shares [Regulation 2(1)(j)] Frequently traded shares
means shares of a target company, in which the traded turnover of any stock
exchange during the twelve calendar months preceding the calendar month
in which the public announcement is required to be made under this
Regulations, is at least ten per cent of the total number of shares of such
class of the target company. Provided that where the share capital of a
particular class of shares of the target company is not identical throughout
such period, the weighted average number of total shares of such class of
the target company shall represent the total number of share
“Volume weighted average market price” (Regulation 2(1)(zb)) “Volume
weighted average market price” means the product of the number of equity
shares traded on a stock exchange and the price of each equity share
divided by the total number of equity shares traded on the stock exchange;
“Volume weighted average price” (Regulation 2(1)(zc)) “Volume weighted
average price” means the product of the number of equity shares bought
and price of each such equity share divided by the total number of equity
shares bought;
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Offer Price – If Frequently traded

Volume Weighted Average Price for the acquisition made during 52 weeks
preceding the PA
Date of Price per share No. of shares Consideration
acquisition (1) acquired (2) (3=1*2)

10.06.2016 100.33 200 20065.18

22.08.2016 94.55 124 11723.71
06.01.2017 104.70 400 41880.43
05.02.2017 103.09 200 20618.14
16.03.2017 88.50 100 8850
Total 56972 5087440.57
Volume-Weighted Average Price 89.30
(Total of 3/Total of 2)
MODE OF PAYMENT- REG 9
(1) The offer price may be paid, —
(a) in cash;
(b) by issue, exchange or transfer of listed shares in the equity
share capital of the acquirer or of any person acting in concert;
(c) by issue, exchange or transfer of listed secured debt
instruments issued by the acquirer or any person acting in concert
with a rating not inferior to investment grade as rated by a credit
rating agency registered with the Board;
(d) by issue, exchange or transfer of convertible debt securities
entitling the holder thereof to acquire listed shares in the equity
share capital of the acquirer or of any person acting in concert; or
(e) a combination of the mode of payment of consideration stated
in clause (a), clause (b), clause (c) and clause (d)
59
GENERAL EXEMPTIONS- REG
10
(a) acquisition pursuant to inter se transfer of shares amongst
qualifying persons, being,—
(i) immediate relatives; (ii) persons named as promoters in the
shareholding pattern
(iii) a company, its subsidiaries, its holding company, other
subsidiaries of such holding company
(iv) persons acting in concert for not less than three years prior to
the proposed acquisition
(v) shareholders of a target company who have been persons
acting in concert for a period of not less than three years prior

60
EXEMPTIONS
acquisition in the ordinary course of business by,—
(i) an underwriter
(ii) a stock broker
(iii) a merchant banker
(iv) by a registered market-maker of a stock exchange
(v) a Scheduled Commercial Bank, acting as an escrow agent;
acquisition pursuant to a scheme,— (i) made under section 18 of
the Sick Industrial Companies (ii) of arrangement involving the
target company as a transferor company or as a transferee
company, or reconstruction of the target company, including
amalgamation, merger or demerger pursuant to an order of a court
[or a tribunal]
acquisition pursuant to a resolution plan approved under section 31
of the Insolvency and Bankruptcy Code, 2016
61
acquisition pursuant to the provisions of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002
acquisition by way of transmission, succession or inheritance;
acquisition of voting rights or preference shares carrying voting
rights arising out of the operation of [sub-section (2) of section 47
of the Companies Act, 2013
Acquisition of shares by the lenders pursuant to conversion of their
debt as part of a debt restructuring implemented in accordance
with the guidelines specified by the Reserve Bank of India:
acquisition of shares by any shareholder of a target company, upto
his entitlement, pursuant to a rights issue (creeping acq.)
acquisition of shares in a target company by any person in
exchange for shares of another target company tendered pursuant
to an open offer for acquiring shares under these regulations
62
EXEMPTIONS BY THE
BOARD- REG 11
11.(1) The Board may for reasons recorded in writing, grant
exemption from the obligation to make an open offer for acquiring
shares under these regulations subject to such conditions as the
Board deems fit to impose in the interests of investors in securities
and the securities market
(5) The Board may after affording reasonable opportunity of being
heard to the applicant and after considering all the relevant facts
and circumstances, pass a reasoned order either granting or
rejecting the exemption or relaxation sought as expeditiously as
possible

63
EXEMPTION FROM
ENFORCEMENT OF THE
REGULATIONS IN SPECIAL
CASES- REG 31A
31A (1) The Board may, exempt any person or class of persons
from the operation of all or any of the provisions of these
regulations for a period as may be specified but not exceeding
twelve months, for furthering innovation relating to testing new
products, processes, services, business models, etc. in live
environment of regulatory sandbox in the securities markets
"regulatory sandbox" means a live testing environment where new
products, processes, services, business models, etc. may be
deployed on a limited set of eligible customers for a specified
period of time, for furthering innovation in the securities market,
subject to such conditions as may be specified by the Board.

64
OPEN OFFER PROCESS- REG
12
Manager to the open offer.
12. (1) Prior to making a public announcement, the acquirer shall
appoint a merchant banker registered with the Board, who is not an
associate of the acquirer, as the manager to the open offer.
(2) The public announcement of the open offer for acquiring shares
required under these regulations shall be made by the acquirer
through such manager to the open offer.

65
TIMING- REG 13
(1) The public announcement referred to in regulation 3 and
regulation 4 shall be made in accordance with regulation 14 and
regulation 15, on the date of agreeing to acquire shares or voting
rights in, or control over the target company.

66
 OPEN OFFER PROCESS –
CHAPTER III (REG 12- 23)
1. Public Announcement: The public announcement of the open offer
for acquiring shares required under the Takeover Regulations shall
be made by the acquirer through manager to the open offer on
the date of agreeing to acquire shares or voting rights in, or
control over the target company (Regulation 13)
2. Public announcement shall be sent to all the stock exchanges on
which the shares of the target company are listed, and the stock
exchanges shall forthwith disseminate such information to the
public – (Regulation 14)
3. Send a copy of the public announcement to SEBI and to the target
company at its registered office within one working day of the
date of the public announcement through the Manager to the
Offer.
67
OPEN OFFER PROCESS
4. Detailed public statement pursuant to the public announcement,
not later than five working days of the public announcement, shall be
published in all editions of any one English national daily with wide
circulation, any one Hindi national daily with wide circulation, and any
one regional language daily with wide circulation at the place where
the registered office of the target company is situated and one
regional language daily at the place of the stock exchange where the
maximum volume of trading in the shares of the target company are
recorded during the sixty trading days preceding the date of the
public announcement. (Regulation 14)
5. The Acquirer through the merchant banker shall within five working
days from the date of the detailed public statement made file with
SEBI a draft of the letter of offer (Regulation 16)
68
OPEN OFFER PROCESS
6. SEBI shall give its comments on the draft letter of offer as expeditiously as
possible but not later than fifteen working days of the receipt of the draft letter
of offer and in the event of no comments being issued by SEBI, it is deemed that
SEBI does not have comments to offer. (Regulation 16)
7. On receipt of the observations from SEBI, the Acquirer through the Manager
to the Offer, shall ensure that the letter of offer is dispatched to the
shareholders whose names appear on the register of members of the target
company as of the identified date, not later than seven working days from the
receipt of comments from the Board.
8. Tendering period shall start not later than twelve working days from date of
receipt of comments from the Board [“tendering period” means the period
within which shareholders may tender their shares in acceptance of an open
offer to acquire shares made under these regulations]
9. Tendering period to continue for 10 days
10. The acquirer shall, within ten working days from the last date of the
tendering period, complete all requirements under these regulations and other
applicable law relating to the open offer including payment of consideration to
the shareholders who have accepted the open offer 69
CONTENTS- REG 15
(1) The public announcement shall contain such information as may
be specified, including the following,—
(a) name and identity of the acquirer and persons acting in concert
with him;
(b) name and identity of the sellers, if any;
(c) nature of the proposed acquisition such as purchase of shares or
allotment of shares, or any other means of acquisition of shares or
voting rights in, or control over the target company;
(d) the consideration for the proposed acquisition that attracted the
obligation to make an open offer for acquiring shares, and the price
per share, if any;
(e) the offer price, and mode of payment of consideration;
(f) offer size, and conditions as to minimum level of acceptances,
(g) intention of the acquirer to either delist the target company or
retain the listing of the target company.
70
CONTENTS- REG 15
(2) The detailed public statement pursuant to the public
announcement shall contain such information as may be specified
in order to enable shareholders to make an informed decision with
reference to the open offer.

(3) The public announcement of the open offer, the detailed public
statement, and any other statement, advertisement, circular,
brochure, publicity material or letter of offer issued in relation to
the acquisition of shares under these regulations shall not omit any
relevant information, or contain any misleading information.

71
Open Offer Process
Opening Bank Making
Public account & Detailed Public
Triggering Announcement depositing Statement
Event (as per Reg funds (DPS)
13) (Within 2 W. (Within 5 W.
Days) Days)

Expiry of
Filing Draft
Dispatching Receipt of SEBI Competing
Letter of Offer
Letter of offer Comments on offer Period
with SEBI
to draft letter of (Within 15 W.
shareholders offer (Within 5 W.
Days from
days)
date of DPS)

Opening of Closure of Post Offer

Tendering Payment to Compliance
Tendering shareholders
period period s
DISCLOSURES- REG 28
28.(1) The disclosures under this Chapter shall be of the
aggregated shareholding and voting rights of the acquirer or
promoter of the target company or every person acting in concert
with him.
(2) For the purposes of this Chapter, the acquisition and holding of
any convertible security shall also be regarded as shares, and
disclosures of such acquisitions and holdings shall be made
accordingly.

73
DISCLOSURE OF
ACQUISITION AND
DISPOSAL- REG 29
29.(1) [Any acquirer, together with persons acting in concert with him
acquiring shares or voting rights in a target company, which taken together
aggregates to five per cent or more of the shares of such target company,
shall disclose their aggregate shareholding and voting rights in such target
company in such form as may be specified:]
(2) [Any person together] with persons acting in concert with him, holds
shares or voting rights entitling them to five per cent or more of the shares
or voting rights in a target company, shall disclose the number of shares or
voting rights held and change in shareholding or voting rights, even if such
change results in shareholding falling below five per cent, if there has been
change in such holdings from the last disclosure made under sub-regulation
(1) or under this sub-regulation; and such change exceeds two per cent of
total shareholding or voting rights in the target company, in such form as
may be specified.]
74
DISCLOSURE OF
ACQUISITION AND
DISPOSAL- REG 29
(3) The disclosures required under sub-regulation (1) and sub-regulation (2) shall
be made within two working days of the receipt of intimation of allotment of
shares, or the acquisition [or the disposal] of shares or voting rights in the target
company to,— (a) every stock exchange where the shares of the target company
are listed; and (b) the target company at its registered office.
(4) For the purposes of this regulation, shares taken by way of encumbrance
shall be treated as an acquisition, shares given upon release of encumbrance
shall be treated as a disposal, and disclosures shall be made by such person
accordingly in such form as may be specified:
“encumbrance” shall include,- (a) any restriction on the free and marketable title
to shares, by whatever name called, whether executed directly or indirectly; (b)
pledge, lien, negative lien, non-disposal undertaking; or (c) any covenant,
transaction, condition or arrangement in the nature of encumbrance, by
whatever name called, whether executed directly or indirectly.]

75