Comparison_definitionsn.pdf With Changes

8/3/2019 Comparison_definitionsn.pdf With Changes

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A Comparison of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 with the Recommendation

given by Takeover Regulations Advisory Committee (TRAC)

Present Law Proposed Law ChangeRegulation 1 Short Title and Commencement

(1) These regulations shall be called theSecurities and Exchange Board of India(Substantial Acquisition of Shares andTakeovers) Regulations, 1997.

(1) These regulations shall be called the Securities andExchange Board of India (Substantial Acquisition ofShares and Takeovers) Regulations, 2010.

(2) These regulations shall come into force on thedate of their publication in the Official Gazette.

(2) These regulations shall come into force on 1[]

(3) (3) These regulations shall apply to direct and indirectacquisition of shares or voting rights in, or control overany target company.

New

Regulation 2 Definitions

(1) In these regulations, unless the context otherwiserequires: -

(1) In these regulations, unless the context otherwiserequires, the terms defined herein shall bear themeanings assigned to them below, and their cognateexpressions and variations shall be construedaccordingly,

(a) Act means the Securities and Exchange Boardof India Act, 1992 (15 of 1992);

(a) Act means the Securities and Exchange Board ofIndia Act, 1992 (15 of 1992);

No change

(b)acquirer means any person who, directly orindirectly, acquires or agrees to acquire shares orvoting rights in the target company, or acquires oragrees to acquire control over the target company,either by himself or with any person acting in concertwith the acquirer;

(b) acquirer means any person who, directly orindirectly, acquires or agrees to acquire whether byhimself, or through, or with persons acting in concert withhim, shares or voting rights in, or control over a targetcompany;

Re write

(c ) control shall include the right to appoint majorityof the directors or to control the management or policydecisions exercisable by a person or persons actingindividually or in concert, directly or indirectly,including by virtue of their shareholding ormanagement rights or shareholders agreements orvoting agreements or in any other manner.

(g) control includes the right or the ability to appointmajority of the directors or to control the management orpolicy decisions of the target company, exercisable by aperson or persons acting individually or in concert,directly or indirectly, including by virtue of theirshareholding or management rights or shareholdersagreements or voting agreements or in any other manner

1. Now if a person has theability to appoint the directorsof the company whether heholds the


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Present Law Proposed Law Change

Explanation:

i. Where there are two or more persons in controlover the target company, the cesser of any oneof such persons from such control shall not be

deemed to be a change in control ofmanagement nor shall any change in the natureand quantum of control amongst them constitutechange in control of management:Provided that the transfer from joint control tosole control is effected in accordance withclause (e) of sub-regulation (1) of regulation 3.

If consequent upon change in control of the targetcompany in accordance with regulation 3, the controlacquired is equal to or less than the control exercisedby person(s) prior to such acquisition of control, such

control shall not be deemed to be a change in control;]

Provided that a director or officer of a targetcompany shall not be considered to be in controlover such target company, merely by virtue ofholding such position;

share or not in the company alsobe CONTROL in the hands of thatPERSON.2. Previously the change from

Joint Control to Single control

not be considered as changein control. Now this provisionhas been deleted.

cc) disinvestment means the sale by the CentralGovernment or by the State Government as the casemay be of its shares or voting rights and/or control, ina listed Public Sector Undertaking;

(i) disinvestment means the direct or indirect saleby the central government, any state government or by agovernment company, as the case may be, of shares orvoting rights in, or control over, a target company, whichis a public sector undertaking;

1. Now even indirect sale of thegovernments holding is alsoincluded in the Disinvestment.

2. Along with the Central and StateGovernment, the sale by theGovernment Company is alsoincluded.

(d) investigating officer means any personappointed by the Board under regulation 38;

Deleted


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e)person acting in concert comprises,

1. persons who, for a common objective orpurpose of substantial acquisition of shares orvoting rights or gaining control over the target

company, pursuant to an agreement orunderstanding (formal or informal), directly orindirectly co-operate by acquiring oragreeing to acquire shares or voting rightsin the target company or control over thetarget company,

2. without prejudice to the generality of thisdefinition, the following persons will bedeemed to be persons acting in concert withother persons in the same category, unlessthe contrary is established :

i. a company, its holding company, orsubsidiary or such company or companyunder the same management eitherindividually or together with each other;

ii. a company with any of its directors, or anyperson entrusted with the management ofthe funds of the company;

iii. directors of companies referred to in sub-clause (i) of clause (2) and their associates;

iv. mutual fund with sponsor or trustee or assetmanagement company;

v. foreign institutional investors with sub-account(s);

(r) persons acting in concert means,

(1) persons who, with a common objective or purpose ofacquisition of shares or voting rights in, or exercisingcontrol over a target company, pursuant to an

agreement or understanding, formal or informal, directlyor indirectly co-operate for acquisition of shares or votingrights in, or exercise of control over the target company.

(2) Without prejudice to the generality of the foregoing, thepersons falling within the following categories shall bedeemed to be persons acting in concert with other personswithin the same category, unless the contrary isestablished,

i. a company, its holding company, subsidiarycompany and any company under the same

management;ii. a company, its directors, and any person entrusted

with the management of the company;iii. directors of companies referred to in sub-clause (i)

of clause (2) and associates of such directors;vi. a mutual fund, its sponsor, trustees, trustee

company, and assetmanagement company;

ix. a foreign institutional investor and its sub-accounts;x. a merchant banker and its client, who is an acquirer;

ii) The Management of the funds ofthe company is replaced with themanagement of the company.

(iv) Now along with others TrusteeCompanies are also included

(viii) Sponsor, trustees, trusteecompany and assets management

company also included


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vi. merchant bankers with their client(s) asacquirer;

vii. portfolio managers with their client(s) asacquirer;

viii. venture capital funds with sponsors;

ix. banks with financial advisers, stock brokersof the acquirer, or any company which is aholding company, subsidiary or relative of theacquirer :Provided that sub-clause (ix) shall not applyto a bank whose sole relationship with theacquirer or with any company, which is aholding company or a subsidiary of theacquirer or with a relative of the acquirer, isby way of providing normal commercialbanking services or such activities inconnection with the offer such as confirmingavailability of funds, handling acceptances

and other registration work;x. any investment company with any person

who has an interest as director, fundmanager, trustee, or as a shareholder havingnot less than 2 per cent of the paid-up capitalof that company or with any other investmentcompany in which such person or hisassociate holds not less than 2 per cent ofthe paid-up capital of the latter company.Note : For the purposes of this clauseassociate means,a) any relative of thatperson within the meaning of section 6 of theCompanies Act, 1956 (1 of 1956); and b)

family trusts and Hindu undivided families

xi. a portfolio manager and its client, who is an acquirer;viii. a venture capital fund and its sponsor, trustees, trusteecompany and asset

management company;

xii. banks and stock brokers of the acquirer, or of anycompany which is a holding company or subsidiary ofthe 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 bankwhose sole role is that of providing normal commercialbanking services or activities in relation to an openoffer under these regulations;

xiii. an investment company or fund and anyperson who has an interest in such investment

company or fund as a shareholder or unitholder having not less than 10 per cent ofthe paid-up capital of the investmentcompany or unit capital of the fund, and anyother investment company or fund in whichsuch person or his associate holds not lessthan 10 per cent of the paid-up capital ofthat investment company or unit capital ofthat fund:

Provided that nothing contained in this sub-clause shallapply to holding of units of mutual funds registered with theBoard;

ix) The Financial advisor are nowincluded in the Person acting inconcert.

(x) Along with the Investmentcompany, the funds are alsoincluded. Also The percentage ofholding of the person is increasedfrom 2% to 10%.

The definition of the associatebroaden.


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Explanation.

For the purposes of this clause associate of a personmeans,(a) any immediate relative of such person;

(b) trusts of which such person or his immediate relative isa trustee;(c) partnership firm in which such person or his immediaterelative is a partner; and(d) members of Hindu undivided families of which suchperson is a coparcener;

i. promoters and members of thepromoter group.

ii. immediate relatives;a collective investment scheme and its collective

investment management company, trustees and trusteecompany;

New

(f) offer period means the period between thedate of entering into Memorandum of Understandingor the public announcement, as the case may beand the date of completion of offer formalitiesrelating to the offer made under these regulations;]

(q) offer period means the period between the date ofentering into an agreement to acquire shares, voting rightsin, or control over a target company requiring a publicannouncement, or the date of the public announcement,whichever is earlier, and the date on which the payment ofconsideration to shareholders who have accepted the openoffer is made;

The definition is now moredescriptive explaining the eventwhen the period will start and evenwhen the period will expire.

The meaning not changed.

g) panel means a panel constituted by the Boardfor the purpose of regulation 4;

_

Deleted


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Present Law Proposed Law Change(h) promoter means

a)any person who is in control of the targetcompany;

b)any person named as promoter in any offerdocument of the target company or anyshareholding pattern filed by the target companywith the stock exchanges pursuant to the ListingAgreement, whichever is later;and includes any person belonging to the promotergroup as mentioned in Explanation I :

Provided that a director or officer of the targetcompany or any other person shall not be apromoter, if he is acting as such merely in hisprofessional capacity.

(t) promoter has the same meaning as in the Securitiesand Exchange Board of India (Issue of Capital and

Disclosure Requirements) Regulations, 2009 and includesa member of the promoter group;

Instead of detail definition, areference being made to the SEBI

(ICDR) Regulations, 2009 to makethe definition of Promoter at par in

both the regulations.

Explanation I : For the purpose of this clause,promoter groups shall include :

a. in case promoter is a body corporatei. a subsidiary or holding company of

that body corporate;ii. any company in which the promoter

holds 10 per cent or more of theequity capital or which holds 10 percent or more of the equity capital ofthe promoter;

iii. any company in which a group of

individuals or companies orcombinations thereof who holds 20per cent or more of the equitycapital in that company also holds20 per cent or more of the equitycapital of the target company; and

(u) promoter group has the same meaning as in theSecurities and Exchange Board of India (Issue of Capitaland Disclosure Requirements) Regulations, 2009;

Instead of detail definition, areference being made to the SEBI(ICDR) Regulations, 2009 to makethe definition of Promoter Group at

par in both the regulations.


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a. in case the promoter is an individuali. the spouse of that person, or any

parent, brother, sister or child of thatperson of his spouse;

ii. any company in which 10 per cent

or more of the share capital is heldby the promoter or an immediaterelative of the promoter or a firm orHUF in which the promoter or anyone or more of his immediaterelative is a member;

iii. any company in which a companyspecified in (i) above, holds 10 percent or more, of the share capital;and

iv. any HUF or firm in which theaggregate share of the promoterand his immediate relatives is equal

to or more than 10 per cent of thetotal.

Explanation II : Financial Institutions, ScheduledBanks, Foreign Institutional Investors (FIIs) andMutual Funds shall not be deemed to be a promoteror promoter group merely by virtue of theirshareholding. Provided that the FinancialInstitutions, Scheduled Banks and ForeignInstitutional Investors (FIIs) shall be treated aspromoters or promoter group for the subsidiaries orcompanies promoted by them or mutual fundssponsored by them.]

_


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(i) public financial institution means a public financialinstitution as defined in section 4A of the Companies Act,1956;

1[(ii) Public Sector Undertaking means a company in

which the Central Government or a State Government]holds 50% or more of its equity capital or is in control ofthe company;]

v) public sector undertaking means a targetcompany in which, directly or indirectly, majority ofshares or voting rights or control is held by thecentral government or any state government orgovernments, or partly by the central government

and partly by one or more state governments;

Re write

(j) public shareholding means shareholding held bypersons other than promoters as defined under clause (h);

Deleted

(k) shares means shares in the share capital of acompany carrying voting rights and includes any securitywhich would entitle the holder to receive shares withvoting rights but shall not include preference shares;

(w) shares means shares in the equity sharecapital of a target company carrying voting r ights,and includes any security which entitles the holderthereof to exercise voting rights;Provided that all depository receipts entitling the

holder thereof to exercise voting rights in thetarget company shall be regarded as shares.

Now the Depository receipts arealso included in the definition.

(l)sick industrial company shall have the samemeaning assigned to it in clause (o) of sub-section (1) ofsection 3 of the Sick Industrial Companies (SpecialProvisions) Act, 1985 (1 of 1986), or any statutory re-enactment thereof;

_Deleted

(m) State level financial institution means a StateFinancial Corporation established under section 3 of theState Financial Institutions Act, 1951, and includes a

development corporation established as a company by aState Government with the object of development ofindustries or agricultural activities in the State;

(y) State-level financial institution means aFinancial Corporation established under section 3or section 3A and institutions notified under

section 46 of the State Financial Corporations Act,1951 (63 of 1951), and includes a developmentcorporation established as a company by a stategovernment with the object of development ofindustries or agricultural activities in the state;

Section 3A of the State FinancialCorporations Act, 1951 also

included.


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(n) stock exchange means a stock exchange which hasbeen granted recognition under section 4 of the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956);

z) stock exchange means a stock exchangewhich has been granted recognition under section4 of the Securities Contracts (Regulation) Act,

1956 (42 of 1956);

No change

(o) target company means a listed company whoseshares or voting rights or control is directly or indirectlyacquired or is being acquired;

(aa)target company means a companyincorporated in India whose shares are listed on astock exchange;

Modified. Meaning not changed.

p) working days shall mean the working days of theBoard.]

(e) business day means any day excludingSaturday and Sunday and any other day declaredby the Board as a holiday.

Modified but meaning not changed.

_(c) acquisition means, directly or indirectly,acquiring or agreeing to acquire shares or votingrights in, or control over, a target company;

New

_ (d) Board means the Securities and Exchange

Board of India established under section 3 of the

Act;

New

_ (f) company includes a body corporate; New

_(h) delisting threshold means a shareholdingentitling exercise of ninety per cent of the votingrights in a target company, excluding voting rightson shares held by a custodian and against whichdepository receipts have been issued overseas,

with reference to the share capital of the targetcompany as of the last day of the tenderingperiod;

New

_ (j) financial year means the period of twelve

months commencing on the first day of April;

New


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_(k) frequently traded shares means shares of atarget company in which the traded turnover onany stock exchange during the twelve calendar

months preceding the calendar month in whichthe public announcement is made, is at least tenper cent of the total number of shares of suchclass of such target company:Provided that where the total share capital of thetarget company is not identical throughout suchperiod, the weighted average number of totalshares of the target company shall represent thetotal number of shares.

New. Earlier the definition of theInfrequently traded shares given in

Reg 20.

_(l) identified date means the date falling on thetenth business day prior to the commencement ofthe tendering period, for the purposes ofdetermining the shareholders to whom the letter of

offer shall be sent;

New. Eariler the definition is givenas Specified Date in the Reg 19.

_(m) immediate relative means any spouse of aperson, and includes parent, sibling or child ofsuch person or of the spouse;

New.

_n) listing agreement means the agreement withthe stock exchange governing the conditions oflisting of shares of the target company;

New.

_ (o) maximum permissible non-publicshareholding means such percentage

shareholding in the target company excluding theminimum public shareholding required under thelisting agreement;

New.

_(p) manager to the open offer means themerchant banker referred to in regulation 12;

New.


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_(s) postal ballot means a postal ballot asprovided for under the Companies (Passing of theResolution by Postal Ballot) Rules, 2001 made

under the Companies Act, 1956 (1 of 1956);

New

_

ab) tendering period means the period withinwhich shareholders may tender their shares inacceptance of an open offer to acquire sharesmade under these regulations.

New

(2) All other expressions unless defined herein shall havethe same meaning as have been assigned to them underthe Act or the Securities Contracts (Regulation) Act, 1956,or the Companies Act, 1956, or any statutory modificationor re-enactment thereto, as the case may be.

(2) All other expressions unless defined hereinshall have the same meaning as have beenassigned to them under the Act or the SecuritiesContracts (Regulation) Act, 1956, (42 of 1956) orthe Companies Act, 1956 (1 of 1956), or any

statutory modification or re-enactment thereto, asthe case may be.

No change

Documents

Comparison_definitionsn.pdf With Changes