Regulation 22 - General obligations of the acquirer. - Securities And Exchange Board of India(Substantial Acquisition of Shares And Takeovers) Regulations, 1997

General obligations of the acquirer. 22. (1) The public announcement of an offer to acquire the shares of the target company shall be made only when the acquirer is able to implement the offer. (2) Within 14 days of the public announcement of the offer, the acquirer shall send a copy of the draft letter of offer to the target company at its registered office address, for being placed before the board of directors and to all the stock exchanges where the shares of the company are listed. (3) The acquirer shall ensure that the letter of offer is sent to all the shareholders (including non-resident Indians) of the target company, whose names appear on the register of members of the company as on the specified date mentioned in the public announcement, so as to reach them within 45 days from the date of public announcement: Provided that where the public announcement is made pursuant to an agreement to acquire shares or control over the target company, the letter of offer shall be sent to shareholders other than the parties to the agreement. Explanation .-(i) A copy of the letter of offer shall also be sent to the Custodians of Global Depository Receipts or American Depository Receipts to enable such persons to participate in the open offer, if they are entitled to do so. (ii) A copy of the letter of offer shall also be sent to warrant holders or convertible debenture holders, where the period of exercise of option or conversion falls within the offer period. (4) The date of opening of the offer shall be not later than the 1 [fifty fifth] day from the date of public announcement. (5) The offer to acquire shares from the shareholders shall remain open for a period of 2 [twenty] days. 3 [(5A) The shareholder shall have the option to withdraw acceptance tendered by him up to three working days prior to the date of closure of the offer.] (6) In case the acquirer is a company, the public announcement of offer, brochure, circular, letter of offer or any other advertisement or publicity material issued to shareholders in connection with the offer must state that the directors accept the responsibility for the information contained in such documents: Provided that if any of the directors desires to exempt himself from responsibility for the information in such document, such director shall issue a statement to that effect, together with reasons thereof for such statement. (7) During the offer period, the acquirer or persons acting in concert with him shall not be entitled to be appointed on the board of directors of the target company : 4 [Provided that in case of acquisition of shares or voting rights or control of a Public Sector Undertaking pursuant to a public announcement made under the proviso to sub-regulation (1) of regulation 14, the provisions of sub-regulation (8) of regulation 23 shall be applicable :] 5 [Provided further that where the acquirer, other than the acquirer who has made an offer under regulation 21A, after assuming full acceptances, has deposited in the escrow account hundred per cent of the consideration payable in cash where the consideration payable is in cash and in the form of securities where the consideration payable is by way of issue, exchange or transfer of securities or combination thereof, he may be entitled to be appointed on the Board of Directors of the target company after a period of twenty-one days from the date of public announcement.] (8) Where an offer is made conditional upon minimum level of acceptances, the acquirer or any person acting in concert with him- (i) shall, irrespective of whether or not the offer received response to the minimum level of acceptances, acquire shares from the public to the extent of the minimum percentage specified in sub-regulation (1) of regulation 21 : Provided that the provisions of this clause shall not be applicable in case the acquirer has deposited in the escrow account, in cash, 50 per cent of the consideration payable under the public offer; (ii) shall not acquire, during the offer period, any shares in the target company, except by way of fresh issue of shares of the target company, as provided for under regulation 3; (iii) shall be liable for penalty of forfeiture of the entire escrow amount, for the non-fulfilment of obligations under the regulations. (9) If any of the persons representing or having interest in the acquirer is already a director on the board of the target company or is an insider within the meaning of the Securities and Exchange Board of India (Insider Trading) Regulations, 1992, he shall refuse himself and not participate in any matter(s) concerning or relating to the offer including any preparatory steps leading to the offer. (10) On or before the date of issue of public announcement of offer, the acquirer shall create an escrow account as provided under regulation 28. (11) The acquirer shall ensure that firm financial arrangement has been made for fulfilling the obligations under the public offer and suitable disclosures in this regard shall be made in the public announcement of offer. (12) The acquirer shall, within a period of 6 [fifteen] days from the date of the closure of the offer, complete all procedures relating to the offer including payment of consideration to the shareholders who have accepted the offer and for the purpose open a special account as provided under regulation 29 : Provided that where the acquirer is unable to make the payment to the shareholders who have accepted the offer before the said period of 7 [fifteen] days due to non-receipt of requisite statutory approvals, the Board may, if satisfied that non-receipt of requisite statutory approvals was not due to any wilful default or neglect of the acquirer or failure of the acquirer to diligently pursue the applications for such approvals, grant extension of time for the purpose, subject to the acquirer agreeing to pay interest to the shareholders for delay beyond 8 [fifteen] days, as may be specified by the Board from time to time. (13) Where the acquirer fails to obtain the requisite statutory approvals in time on account of wilful default or neglect or inaction or non-action on his part, the amount lying in the escrow account shall be liable to be forfeited and dealt with in the manner provided in clause (e) of sub-regulation (12) of regulation 28, apart from the acquirer being liable for penalty as provided in the regulations. (14) In the event of withdrawal of offer in terms of the regulations, the acquirer shall not make any offer for acquisition of shares of the target company for a period of six months from the date of public announcement of withdrawal of offer. (15) In the event of non-fulfilment of obligations under Chapter III or Chapter IV of the regulations the acquirer shall not make any offer for acquisition of shares of any listed company for a period of twelve months from the date of closure of the offer. (16) If the acquirer, in pursuance of an agreement, acquires shares which along with his existing holding, if any, increases his shareholding beyond 9 [15] per cent, then such agreement for sale of shares shall contain a clause to the effect that in case of non-compliance of any provisions of this regulation, the agreement for such sale shall not be acted upon by the seller or the acquirer: 10 [Provided that in case of the acquisition of shares of a Public Sector Undertaking pursuant to a public announcement made under the Regulations, the provisions of sub-regulation (8) of regulation 23 shall be applicable.] 11 [(17) Where the acquirer or persons acting in concert with him has acquired any shares in terms of sub-regulation (7) of regulation 20 at a price equal to or less or more than the offer price, he shall disclose the number, percentage, price and the mode of acquisition of such shares to the stock exchanges on which the shares of the target company are listed and to the merchant banker within 24 hours of such acquisition and the stock exchanges shall forthwith disseminate such information to the public.] (18) Where the acquirer has not either, in the public announcement, and, or in the letter of offer, stated his intention to dispose of or otherwise encumber any assets of the target company except in the ordinary course of business of the target company, the acquirer, where he has acquired control over the target company, shall be debarred from disposing of or otherwise encumbering the assets of the target company for a period of two years from the date of closure of the public offer. 12 [(19) The acquirer and the persons acting in concert with him shall be jointly and severally responsible for fulfillment of obligations under these regulations.] ------------------- Notes:- 1. Substituted for sixtieth by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2004, w.e.f. 3-9-2004. 2. Substituted for 30 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2004, w.e.f. 3-9-2004. 3. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. 4. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2001, w.e.f. 12-9-2001. 5. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. 6. Substituted for 30 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2004, w.e.f. 3-9-2004. 7. Substituted for 10 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 1998, w.e.f. 28-10-1998. 8. Substituted for 10 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 1998, w.e.f. 28-10-1998. 9. Substituted for 10 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 1998, w.e.f. 28-10-1998. 10. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2001, w.e.f. 17-8-2001. 11. Substituted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002. Prior to its substitution, sub-regulation (17) read as under: (17) Where the acquirer or persons acting in concert with him has acquired any shares 27 in terms of sub-regulation (4) of regulation 20 he, shall disclose the number, percentage, price and the mode of acquisition of such shares to the stock exchanges on which the shares of the target company are listed and to the merchant banker, within 24 hours of such acquisition. 12. Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002, w.e.f. 9-9-2002.