On June 16, 2020, the Securities and Exchange Board of India (“SEBI”) notified the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2020 (“Amendment Regulations”) to amend the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”).
Pursuant to the Amendment Regulations, a new proviso has been inserted in regulation 3(2) of the Takeover Regulations that provides that acquisitions beyond 5% (five percent) but up to 10% (ten percent) of the voting rights in the target company shall be permitted for the financial year 2020-21 only in respect of acquisition by a promoter pursuant to preferential issue of equity shares by the target company. Therefore, in light of the insertion, promoters who together with persons acting in concert hold shares or voting rights in a target company entitling them to exercise 25% (twenty five percent) or more of the voting rights in the target company can now acquire up to an additional 10% (ten percent) of the voting rights in the target company in the financial year 2020-21 pursuant to preferential issue of equity shares by the target company without making an open offer in terms of regulation 3(2) of the Takeover Regulations.
Further, a relaxation has also been granted by the Amendment Regulations from the first proviso of regulation 6(1) of the Takeover Regulations until March 31, 2021. The first proviso to regulation 6(1) of the Takeover Regulations states that in the event an acquirer or a person acting in concert with the acquirer, has acquired shares of the target company in the preceding 52 (fifty two) weeks without attracting the obligation to make a public announcement of an open offer (“Concerned Acquirer”), such Concerned Acquirer will not be eligible to voluntarily make a public announcement of an open offer for acquiring shares under regulation 6(1) of the Takeover Regulations. In light of the relaxation, the Concerned Acquirer shall be eligible to voluntarily make a public announcement of an open offer for acquiring shares under regulation 6(1) of the Takeover Regulations until March 31, 2021.
Read the amendment regulations here.
This update has been contributed by Adity Chaudhury (Partner) and Deeya Ray (Associate).
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