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P R E S E N T E D B Y :S A Y L E E G A N D H I 1 0 1 4 7

S H R E N I K M E H T A 1 0 1 5 0

S N E H A P A I 1 0 1 5 5

S N E H A S H R I Y A N 1 0 1 5 6

S O N A L I R E L E 1 0 1 5 8

T I R A T H B H A T T 1 0 1 6 5

V A R U N D A V E 1 0 1 6 9

OVERVIEW OF SEBI ACT &SEBI TAKEOVER CODE

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CONTENTS

SEBI Act, 1992

Necessity For Take over Code

Take over Code for Investors

SEBI Take-over Regulations

Threshold Disclosure Requirements

International Application

Examples

Highlights of the New Amendments

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THE SECURITIES EXCHANGE BOARD OFINDIA ACT, 1992 (SEBI ACT, 1992)

SEBIs Mission:

To make India as one of the best securities market of the world

SEBI as one of the most respected regulator in the world

SEBI Act, 1992

An Act to provide for the establishment of a Board to protect the interests ofinvestors in securities

to promote the development of, and to regulate, the securities market

for matters connected therewith or incidental thereto

SEBI Act Amendments in 1995, 1999 & 2000

To meet the requirements of:

Changing needs of the securities market

Respond to the development in the securities market

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NECESSITY FOR TAKE-OVER CODE

Globalization opened the doors of Indian economy for the

overseas investors

Mergers and acquisitions were the best option

Thus, SEBI appointed a committee headed by P.N. Bhagwati

o To study the effect of takeovers and mergers on securities

market

o Suggest the provisions to regulate takeovers and mergers.

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TAKEOVER CODE FOR INVESTORS

The confidence of retail investors in the capital market is a crucial

factor for its development

Exit opportunity

Full and truthful disclosure of open offer

Ensure the sufficiency of financial resources for the payment of

acquisition price to the investors

The process shall be completed in a time bound manner

Disclosures shall be made of all material transactions at earliest

opportunity

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SEBI TAKEOVER REGULATIONS

Mergers are primarily supervised by the High Court(s) and the

Ministry of Company Affairs

The SEBI regulates takeovers of companies that have shares

listed on any stock exchange in India

The Takeover Code, which sets out procedures governing any

attempted takeover of a company that has its shares listed on one

or more recognized stock exchange(s) in India

Regulation 10, 11, and 12 of the Takeover Code deal with public

offers

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THRESHOLD DISCLOSURE REQURIEMENTS

Acquisition % DisclosureRequirement

Timeframe Target CompanyObligation

5% and more of sharevoting rights

Every stage acquirermust disclose hisholding to target

company and stockexchange

Within 2 days ofacquisition or receiptof intimation of

allotment of shares

Inform stockexchanges where theshares of target

company is listed

1.)where acquisition of5%, 10% or 14% or 54%or 74% of share voting

rights

Holding >15% but

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INTERNATIONALAPPLICATION

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India U.S U.K Japan

Regulator SEBI SEC FSA Japan fair tradecomm.

Threshold limit(initialacquisition)

25% Offers are onlyvoluntary

30% 1. acquisition ofmore than 10%of the target

shares,2. more than5% acquiredfrom the off-exchange(market) bid ora stand-off(cross-tradingon an after-hours)

Offer size Minimum 26 %

of the votingcapital of the

As much as 5%

called TenderOffers Less

Conditional on

holding morethan 50% of

Remaining

shares

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India U.S U.K Japan

Timing ofdisclosures to bemade

Event Based:Within 2 businessdays from the dateacquisition or receiptof intimation ofallotment oracquisition of shares,as the case may be.ContinualDisclosure: Within 15

business days fromthe end of financial

year

- - Within 30 days ofthe acquisition

Can shareholderswithdraw the

acceptancestendered?

No Yes, up to sevendays of the copies

of the offer are sent

Yes. Under certaincircumstances

-

Competitive Bidsallowed

Yes - Yes Yes

Penalties Civil and Criminal

Liabilities

Civil penalties Reprimand, public

censure, etc

Civil as well as

Criminal Liabilities

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EXAMPLES

For instance, in the BSE 500 companies, in the case of 215 companies the

promoters own less than 50% stake making them good candidates for

takeovers. And out of these 215 companies, in 76 companies, at least single

(non-promoter) shareholder owns between 10% to 49.99%. Hence, in the

case of those 76 companies, the vulnerability of being taken over is quite

high, the report pointed out.

For example, in Moser Baer, the promoter holding is 16.3% while the

largest shareholder,Warburg Pincus, holds 13.1%. "In such cases, the

vulnerability of the company significantly goes up,"

http://timesofindia.indiatimes.com/topic/Warburg-Pincushttp://timesofindia.indiatimes.com/topic/Warburg-Pincushttp://timesofindia.indiatimes.com/topic/Warburg-Pincus

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HIGHLIGHTS OF THE NEW SEBI TAKEOVERCODE

Increase in threshold limit

From15% to 25%

Increase in Offer Size

From 20% to 26%

Abolition of Non-compete fees

Acquisition from the other competing acquirer

A recommendation on the offer by the Board of Target Company

Recommendation has been made mandatory

Voluntary offers have been introduced subject to certain conditions

Existing definition of Control shall be retained as it is.

The Board did not accept the recommendation of TRAC to provide for delisting

pursuant to an offer and proportionate acceptance.

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THANK YOU