INDIA: SEBI publishes amendments to India Takeover Regulations

Tuesday March 26 2013

The Securities and Exchange Board of India has published amendments to India takeover rules through the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations 2013. The amendments concern the following:

• minor changes to the exemptions from the requirement to make an open offer under Regulations 3 and 4 as regards buy-back offers
• changes to Regulation 13 on the timing of public announcements in relation to tender offers through buy-back arrangements
• changes to Regulation 22 restricting acquisitions prior to the completion of acquisitions to allow the acquisition of shares of the target company through preferential issue or through stock exchange settlement process
• changes to Regulation 23 on withdrawl of open offers to prohibit withdrawl of open offers made through preferenmtial issue even where the proposed acquisition through the preferential issue is not successful

SEBI has also rephrased Regulation 29(2) which requires the disclosure of changes of shareholdings of 2% where the total shareholding exceeds 5%. Regulation 29(2) now reads:

“Any person, who 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 na target company, shall disclose the number of shares or voting rights held andchange 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.” [emphasis added]

This now clarifies that disclosure will be required on overall holdings changing by a 2% threshold – previously, the rules had applied to every acquisition or disposal of shares representing two percent or more of the shares or voting rights. In addition, a reporting requirement now applies to holdings falling below the initial 5% threshold.

The Regulations will enter into effect on their publication in the Official Gazette.

Click on the above link for the Regulations.