Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2020
By INSOL India Editorial Team Posted On : August 18, 2020
Securities and Exchange Board of India (“SEBI”) on July 1, 2020, notified amendments to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. A new proviso was inserted after the existing proviso in regulation 17(1) which states that in case of indirect acquisitions where public announcement has been made, an amount equivalent to hundred per cent of the consideration payable in the open offer shall be deposited in the escrow account. Further, an additional proviso was also inserted after the existing proviso in regulation 17(3) which provided that the deposit of securities shall not be permitted in respect of indirect acquisitions where public announcement has been made in terms of clause (e) of regulation 13(2) of these regulations.
SEBI also notified the insertion of regulation 18(11A) where in case, the acquirer is unable to make payment to the shareholders who have accepted the open offer within such period specified under the regulations, the acquirer shall pay interest for the period of delay to all such shareholders whose shares have been accepted in the open offer, at the rate of 10% per annum. The amendment further provides for two provisos to the regulation, which state that – (i) in case the delay was not attributable to any act of omission or commission of the acquirer, or due to the reasons or circumstances beyond the control of the acquirer, the Board may grant a waiver from the payment of interest; (ii) the payment of interest would be without prejudice to the Board taking any action under regulation 32 of these regulations or under IBC.
In regulation 22(2A) of these regulations, the words “other than through bulk deals or block deals,” shall be omitted. Prior to the amendment, Regulation 22 (2A) provided that an “acquirer may acquire share of the target company through preferential issue or through the stock exchange settlement process, other than through bulk deals or block deals….”. The omission of the aforementioned portion helped in expanding the scope of acquiring shares of the target company.
SEBI also notified the insertion of regulation 18(11A) where in case, the acquirer is unable to make payment to the shareholders who have accepted the open offer within such period specified under the regulations, the acquirer shall pay interest for the period of delay to all such shareholders whose shares have been accepted in the open offer, at the rate of 10% per annum. The amendment further provides for two provisos to the regulation, which state that – (i) in case the delay was not attributable to any act of omission or commission of the acquirer, or due to the reasons or circumstances beyond the control of the acquirer, the Board may grant a waiver from the payment of interest; (ii) the payment of interest would be without prejudice to the Board taking any action under regulation 32 of these regulations or under IBC.
In regulation 22(2A) of these regulations, the words “other than through bulk deals or block deals,” shall be omitted. Prior to the amendment, Regulation 22 (2A) provided that an “acquirer may acquire share of the target company through preferential issue or through the stock exchange settlement process, other than through bulk deals or block deals….”. The omission of the aforementioned portion helped in expanding the scope of acquiring shares of the target company.