Regulation 30 - Bail out takeovers. - Securities And Exchange Board of India(Substantial Acquisition of Shares And Takeovers) Regulations, 1997

CHAPTER IV BAIL OUT TAKEOVERS Bail out takeovers. 30 . (1) The provisions of this Chapter shall apply to a substantial acquisition of shares in a financially weak company not being a sick industrial company, in pursuance of a scheme of rehabilitation approved by a public financial institution of a scheduled bank (hereinafter referred to as the lead institution ). (2) The lead institution shall be responsible for ensuring compliance with the provisions of this Chapter. (3) The lead institution shall appraise the financially weak company taking into account the financial viability, and assess the requirement of funds for revival and draw up the rehabilitation package on the principle of protection of interests of minority shareholders, good management, effective revival and transparency. (4) The rehabilitation scheme shall also specifically provide the details of any change in management. (5) The scheme may provide for acquisition of shares in the financially weak company in any of the following manner: (a) outright purchase of shares, or (b) exchange of shares, or (c) a combination of both: Provided that the scheme as far as possible may ensure that after the proposed acquisition the erstwhile promoters do not own any shares in case such acquisition is made by the new promoters pursuant to such scheme. Explanation .-For the purpose of this Chapter, the expression financially weak company means a company, which has at the end of the previous financial year accumulated losses, which has resulted in erosion of more than 50 per cent but less than 100 per cent of its net worth as at the beginning of the previous financial year that is to say of the sum total of the paid-up capital and free reserves.