Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2006. - S.O. No.807(E) - SEBI/LAD/DOP/2605/2006 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATTON Mumbai, the 26th May, 2006 S.O.807(E).-- In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, namely:- 1. These Regulations may be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2006. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 - (i) in regulation 2, in sub-regulation (1), clause (h) shall be substituted with the following, namely - (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% of the total. Explanation II: Financial Institutions, Scheduled Banks, Foreign Institutional Investors (Flls) 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 (Flls) shall be treated as promoters or promoter group for the subsidiaries or companies promoted by them or mutual funds sponsored by them. (ii) in regulation 3 - (A) in sub-regulation (1), in clause (e), in sub-clause (iii) - (I) in item (a), for the words Indian promoters occurring at the beginning, the words Qualifying Indian promoters shall be substituted; (II) item (b) shall be substituted with the following, namely: (b) qualifying promoters. (III) in the Explanation- 1. for the word promoter occurring in the opening part, the words qualifying promoter shall be substituted; 2. in sub-clauses (a) and (b) the word promoter wherever it occurs shall be substituted with the words qualifying promoter ; (B) for sub-regulation (1A), the following shall be substituted, namely - (1A) For the removal of doubt, it is clarified that nothing contained in sub-regulation (1) shall affect the applicability of the listing requirements. (iii) In regulation 10, the provisos and the Explanation shall be omitted; (iv) in regulation 11 - (A) sub-regulation (2) shall be substituted with the following, namely (2) No acquirer, who together with persons acting in concert with him holds, fifty five per cent. (55%) or more but less than seventy five per cent. (75%) of the of the shares or voting rights in a target company, shall acquire either by himself or through persons acting in concert with him any additional shares or voting rights therein, unless he makes a public announcement to acquire shares in accordance with these Regulations: Provided that in a case where the target company had obtained listing of its shares by making an offer of at least ten per cent. (10%) of issue size to the public in terms of clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, or in terms of any relaxation granted from strict enforcement of the said rule, this sub-regulation shall apply as if for the words and figures seventy five per cent. (75%), the words and figures ninety per cent. (90%) were substituted. (B) the existing provisos and the Explanation occurring after sub-regulation (2) shall be omitted; (C) sub-regulation (2A) shall be substituted with the following, namely: (2A) Where an acquirer who (together with persons acting in concert with him) holds fifty five per cent. (55%) or more but less than seventy five per cent. (75%) of the shares or voting rights in a target company, is desirous of consolidating his holding while ensuring that the public shareholding in the target company does not fall below the minimum level permitted by the Listing Agreement, he may do so only by making a public announcement in accordance with these regulations: Provided that in a case where the target company had obtained listing of its shares by making an offer of at least ten per cent. (10%) of issue size to the public in terms of clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, or, in terms of any relaxation granted from strict enforcement of the said rule, this sub-regulation shall apply as if for the words and figures seventy five per cent. (75%) , the words and figures ninety per cent. (90%) were substituted. (v) in regulation 20, in sub-regulation (7), the second proviso shall be substituted with the following, namely - Provided further that nothing contained in sub-regulation (7) shall be construed to authorise an acquirer who makes a public announcement in terms of sub-regulation (2A) of regulation 11 to, acquire any shares during the offer period in the open market or through negotiation or in any other manner otherwise than under the public offer. (vi) in regulation 21 - (A) the proviso occurring after sub-regulation (1) shall be omitted; (B) sub-regulation (2) shall be substituted with the following, namely (2) If the acquisition made in pursuance of a public offer results in the public shareholding in the target company being reduced below the minimum level required as per the Listing Agreement, the acquirer shall take necessary steps to facilitate compliance of the target company with the relevant provisions thereof, within the time period mentioned therein. (C) sub-regulation (3) shall be substituted with the following, namely - (3) Where the public offer is made under sub-regulation (2A) of regulation 11 the minimum size of the public offer shall be the lesser of the following - (a) twenty per cent of the voting capital of the company; or (b) such other lesser percentage of the voting capital of the company as would, assuming full subscription to the offer, enable the acquirer, together with the persons acting in concert with him, to increase his holding to the maximum level possible, which is consistent with the target company meeting the requirements of minimum public shareholding laid down in the Listing Agreement. [F. No. SEBI/LAD/DOP/2605/2006] M. DAMODARAN, Chairman Footnotes: (1) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the Principal Regulations were published in the Gazette of India on February 20, 1997 vide S.O. No. 124(E). (2) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 were subsequently amended (a) SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 1998 published in the Official Gazette vide S.O. 930(E) dated 28th October 1998. (b) SEBI (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000, published in the Official Gazette vide S.O. 278(E) dated 28th March 2000. (c) SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2000 published in the Official Gazette vide S.O. 1178 (E) dated 30th December 2000. (d) SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2001 published in the Official Gazette vide S.O. 791 (E) dated 17th August 2001. (e) SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2001 published in the Official Gazette vide S.O. 875 (E) dated 12th September 2001. (f) SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2001 published in the Official Gazette vide S.O. 1058 (E) dated 24th October 2001. (g) SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 2002 published in the Official Gazette vide S.O. 127(E) dated 29th January 2002. (h) SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2002 published in the Official Gazette vide S.O. 954(E) dated 9th September 2002. (i) SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2002 published in the Official Gazette vide S.O. 1328 (E) dated 18th December, 2002. (j) SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2004 published in the Official Gazette vide S.O. 982 (E) dated 30th August, 2004. (k) SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2004 published in the Official Gazette vide S.O. 5 (E) dated 30th December, 2004.