Regulation 2 - Definitions. - Securities And Exchange Board of India(Substantial Acquisition of Shares And Takeovers) Regulations, 1997

Definitions. 2. (1) In these Regulations, unless the context otherwise requires :- (a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) acquirer means any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer; (c) control shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner; 1 [ Explanation .-(i) Where there are two or more persons in control over the target company, the cesser of any one of such persons from such control shall not be deemed to be a change in control of management nor shall any change in the nature and quantum of control amongst them constitute change in control of management: Provided that the transfer from joint control to sole control is effected in accordance with clause (e) of sub-regulation (1) of regulation 3. (ii) If consequent upon change in control of the target company in accordance with regulation 3, the control acquired is equal to or less than the control exercised by person(s) prior to such acquisition of control, such control shall not be deemed to be a change in control;] 2 [(cc) disinvestment means the sale by the Central Government 3 [or by the State Government as the case may be] of its shares or voting rights and/or control, in a listed Public Sector Undertaking;] (d) investigating officer means any person appointed by the Board under Regulation 38; (e) person acting in concert comprises,- (1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal), directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company. (2) Without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established: (i) a company, its holding company, or subsidiary of such company or company under the same management either individually or together with each other; (ii) a company with any of its directors, or any person entrusted with the management of the 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 asset management company; (v) foreign institutional investors with sub-account(s); (vi) merchant bankers with their client(s) as acquirer; (vii) portfolio managers with their client(s) as acquirer; (viii) venture capital funds with sponsors; (ix) banks with financial advisors, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer: Provided that sub-clause (ix) shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work; (x) any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2 per cent of the paid-up capital of that company or with any other investment company in which such person or his associate holds not less than 2 per cent of the paid up capital of the latter company. Note : For the purposes of this clause associate means :- (a) any relative of that person within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and (b) family trusts and Hindu undivided families; 4 [ (f) offer period means the period between the date of entering into Memorandum of Understanding or the public announcement, as the case may be and the date of completion of offer formalities relating to the offer made under these regulations; ] (g) panel means a panel constituted by the Board for the purpose of Regulation 4; 5 [(h) promoter means- (a) any person who is in control of the target company; (b) any person named as promoter in any offer document of the target company or any shareholding pattern filed by the target company with the stock exchanges pursuant to the Listing Agreement, whichever is later; and includes any person belonging to the promoter group as mentioned in Explanation I: Provided that a director or officer of the target company or any other person shall not be a promoter, if he is acting as such merely in his professional capacity. Explanation I. For the purpose of this clause, promoter group shall include: (a) in case promoter is a body corporate- (i) a subsidiary or holding company of that body corporate; (ii) any company in which the promoter holds 10 % or more of the equity capital or which holds 10 % or more of the equity capital of the promoter; (iii) any company in which a group of individuals or companies or combinations thereof who holds 20 % or more of the equity capital in that company also holds 20 % or more of the equity capital of the target company; and (b) in case the promoter is an individual- (i) the spouse of that person, or any parent, brother, sister or child of that person or of his spouse; (ii) any company in which 10 % or more of the share capital is held by the promoter or an immediate relative of the promoter or a firm or HUF in which the promoter or any one or more of his immediate relative is a member; (iii) any company in which a company specified in (i) above, holds 10 % or more, of the share capital; and (iv) any HUF or firm in which the aggregate share of the promoter and his immediate relatives is equal to or more than 10 per cent of the total. Explanation II. Financial Institutions, Scheduled Banks, Foreign Institutional Investors (FIIs) and Mutual Funds shall not be deemed to be a promoter or promoter group merely by virtue of their shareholding: Provided that the Financial Institutions, Scheduled Banks and Foreign Institutional Investors (FIIs) shall be treated as promoters or promoter group for the subsidiaries or companies promoted by them or mutual funds sponsored by them;] (i) public financial institution means a public financial institution as defined in section 4A of the Companies Act, 1956; 6 [(ii) Public Sector Undertaking means a company in which the Central Government 6 [or a State Government] holds 50% or more of its equity capital or is in control of the company;] 7 [(j) public shareholding means shareholding held by persons other than promoters as defined under clause (h);] (k) shares means shares in the share capital of a company carrying voting rights and includes any security which would entitle the holder to receive shares with voting rights 8 [but shall not include preference shares;] (l) sick industrial company shall have the same meaning assigned to it in clause (o) of sub-section (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), or any statutory re-enactment thereof; (m) State level financial institution means a State Financial Corporation established under section 3 of the State Financial Institutions Act, 1951, and includes a development corporation established as a company by a State Government with the object of development of industries or agricultural activities in the state; (n) stock exchange means a stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (o) target company means a listed company whose shares or voting rights or control is directly or indirectly acquired or is being acquired; 10 [(p) working days shall mean the working days of the Board.] (2) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956, or the Companies Act, 1956, or any statutory modification or re-enactment thereto, as the case may be. ------------------ Notes: 1. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. 2. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2001, w.e.f. 17-8-2001. 3. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2001, w.e.f. 9-9-2002. 4. Substituted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. before it was read as under: (f) offer period means the period between the date of public announcement of the first offer and the date of closure of that offer; 5. Substituted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2006, w.e.f. 26-5-2006. Before it was read as:, clause (h) as inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2005, w.e.f. 3-1-2005 read as under: (h) promoter , unless otherwise provided elsewhere, means- (i) any person who is directly or indirectly in control of the company; or (ii) any person named as promoter in any document for offer of securities to the public or existing shareholders or in the shareholding pattern disclosed by the company under the provisions of the Listing Agreement, whichever is later; or (iii) any person named as person acting in concert with the promoter in any disclosure made in terms of the Listing Agreement with the stock exchange or any other regulations or guidelines made or issued by the Board under the Act, and includes, (a) where such person is an individual, (i) his spouse , parents, brothers, sisters or children; (ii) any company in which twenty six per cent.(26%)or more of the equity share capital is held by him or by the persons mentioned in sub-clause (i) or any firm or Hindu Undivided Family in which he or any of the persons mentioned in sub-clause (i) is a partner or member; (iii) any company in which a company specified in sub-clause (ii), holds more than fifty per cent.(50%) of the equity share capital; (iv) any firm in which the aggregate of his holding and the holdings of the persons mentioned in sub-clause (i) is more than fifty per cent. (50%). (b) where such person is a body corporate, (i) a subsidiary or holding company of that body corporate; (ii) any company in which the said body corporate holds twenty six per cent.(26%) or more of the equity share capital; (iii) any company which holds twenty six percent.(26%) or more of the equity share capital of the said body corporate; (iv) any company in which persons acting in concert hold twenty six per cent.(26%) or more of the equity share capital and those persons acting in concert also hold twenty six per cent.(26%) or more of the equity share capital in such body corporate; (v) any other body corporate under the same management as the said body corporate within the meaning of sub-section (1B) of section370 of the Companies Act, 1956; Explanation I. A financial institution, scheduled commercial bank, foreign institutional investor, mutual fund and a venture capital fund shall not be deemed to be a promoter merely by virtue of its shareholding. Explanation II. A financial institution, scheduled commercial bank, foreign institutional investor or a venture capital fund shall be deemed to be a promoter of its subsidiary and of the mutual fund sponsored by it, as applicable. 6. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2001, w.e.f. 17-8-2001. 7. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. 8. Substituted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2005, w.e.f. 3-1-2005. Prior to its substitution, clause (j) read as under: (j) public shareholding means shareholding in the hands of person(s) other than the acquirer and persons acting in concert with him. 9. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. 10. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002.