20 January 2022
The Securities and Exchange Board of India (“SEBI”), vide its notification dated 06 December 2021, has amended the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST regulations”). The notification has amended the regulatory framework related to delisting of equity shares of a listed company, pursuant to an open offer. The amendment has come into effect from 06December 2021.
SEBI had on 25 June 2021 released a discussion paper on the issue where delisting of a company pursuant to an open offer would require the acquirer to first make an open offer to acquire shares, then dispose of a certain portion of the acquired shares to meet the minimum public shareholding of 75% (seventy five percent), after which the acquirer would again need to acquire more shares from the public to meet the delisting threshold of 90% (ninety percent). To address this issue, SEBI had proposed to allow delisting of a company directly after the making of an open offer, if the 90% (ninety percent) threshold is met by the acquirer.
As per the amendment, if an acquirer intends to delist the target company after making an open offer, the intention to delist the company shall have to be disclosed at the time of making the public announcement and the detailed public announcement for the open offer.
Further, to be eligible for the simplified procedure under the amended regulations, the acquirer must not be: (a) a promoter, part of a promoter group or a person(s) in control; or (b) directly/indirectly associated with the promoter or any person(s) in control; or (c) a person holding more than 25% (twenty five per cent) shares or voting rights of the company, at any time during the preceding 2 (two) years from the date of the public announcement, and the acquirer should not acquire joint control along with an existing promoter/person in control.
In case of an unsuccessful delisting offer, but which results in the shareholding of acquirer to exceed the maximum permissible non-public shareholding threshold of 75% (seventy five percent), the acquirer may make a further attempt to delist the target company in accordance with the delisting regulations at any time before expiry of 12 (twelve) months from the date of completion of the open offer, subject to the acquirer continuing to exceed the said maximum permissible nonpublic shareholding.
The amendment also clarifies that where a competing offer is made, the acquirer shall not be entitled to delist the target company and will not be liable to pay interest to the shareholders on account of delay due to competing offer.
Please click here to read the amendment notification.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
