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TMI BlogGuidelines in respect of the disclosures to be made in the Letter of offer in respect of Buy-back of securities in terms of SEBI (Buy-back of Securities) Regulations, 1998 and Format of Standard letter of offerX X X X Extracts X X X X X X X X Extracts X X X X ..... . This circular is in supersession of the previous circular no. MIRSD/DPS-2/MB/Cir-02/8859/04 dated May 07, 2004 issued to Merchant Bankers registered with SEBI. 5. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with regulation 26 of the SEBI (Buy-Back of Securities) Regulations, 1998 as amended. 6. All Merchant Bankers are advised to ensure compliance with this circular. 7. This circular is available on SEBI website at www.sebi.gov.in under the category "Legal Framework". Yours faithfully, Anindya K Das Deputy General Manager +91-22-26449616 [email protected] Annexure-A SECURITIES AND EXCHANGE BOARD OF INDIA STANDARD LETTER OF OFFER FOR BUY BACK OF SECURITIES IN TERMS OF THE SEBI (BUY BACK OF SECURITIES) REGULATIONS, 1998 General Instructions / Guidelines: 1. The purpose of this standard letter of offer for Buy Back of equity in accordance with Chapter III of the SEBI (Buy Back of Securities) Regulations, 1998 (hereinafter referred to as "the Regulations") is to provide the requisite information about the company so as to enable the shareholders to make an informed decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he draft Letter of Offer as per the standardized format. 11. The merchant banker to give registration number of the Chartered Accountant who has given the report in terms of clause (xi) of Schedule II, part A of the Regulations. Format of the Standard Letter of Offer The sequence of presentation in Letter of Offer shall be as under: 1) Cover page 2) Table of Contents 3) Schedule of activities 4) Definition of key terms 5) Disclaimer clause 6) Text of the Resolution passed at the Board meeting 7) Details of Public Announcement 8) Details of the Buy Back 9) Authority for the Buy Back 10) Necessity of the Buy Back 11) Management Discussion and analysis of the likely impact of Buy Back on the Company. 12) Basis of calculating Buy Back Price 13) Sources of fund for the Buy Back 14) Details of the Escrow Account and the amount to be deposited therein 15) Capital Structure & Shareholding pattern 16) Brief information of the Company. 17) Financial Information about the Company 18) Stock Market Data 19) Details of the Statutory approvals 20) Details of the Registrar to the Buy Back and collection centres 21) Process and methodology for the Buy Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding the enclosures along with the Letter of offer, Relevant applicable provisions/ regulations of Companies Act and SEBI. iii) At the bottom Closing date and day of Buy Back, Opening date and day of Buy Back, The following details of the Manager to the offer * Name of the Manager to the offer * Name of Contact Person * Address * Telephone Number of manager and contact person * Fax Number of manager and contact person * E-mail Address of manager and contact person * SEBI Registration Number * Validity Period The following details of the Registrar to the offer * Name of the Registrar * Name of Contact Person * Address * Telephone Number of registrar and contact person * Fax Number of registrar and contact person * E-mail Address of registrar and contact person * SEBI Registration Number * Validity Period Last date of receipt of complete application form. Relevant applicable provisions/ regulations of Companies Act and SEBI. B) Front inside cover page shall contain the following Table of Contents as follows: Sr.No. Subject Page No. 1) Schedule of activities 2) Definition of key terms 3) Disclaimer clause 4) Text of the Resolution pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quate and are in conformity with the provisions of Companies Act, 1956 and SEBI (Buy Back of Securities) Regulations, 1998. This requirement is to facilitate investors to take an informed decision for tendering their shares in the buy back. It should also be clearly understood that while the Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the offer document, the Manager to the Issue is expected to exercise Due Diligence to ensure that the Company discharges its duty adequately in this behalf and towards this purpose, the Manager to the Issue,_________________ has furnished to SEBI a Due Diligence Certificate dated _____________ in accordance with SEBI (Buyback of Securities) Regulations 1998 which reads as follows : We have examined various documents and materials contained in the annexure to this letter, as part of the due-diligence carried out by us in connection with the finalization of the public announcement and the letter of offer. On the basis of such examination and the discussions with the Company, we hereby state that: * The public announcement and the letter of offer are in conformity with the documents, ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e w.r.t the net worth of the Company * The details of the shareholding of the promoters and its %age w.r.t the total paid up equity of the company * Intention of the promoters to participate in the offer * Promoters shareholding after the buy back. * Statement that the Post buyback non-promoter holding shall not fall below the minimum level required as per listing conditions/ agreement. 7) Authority for the Buy Back * Mention the article number of the Article of Association of the Company allowing the buy back * Relevant provisions of the Companies Act * Date of meeting of the Board of Directors approving the Buy Back * Date of passing of special resolution by the shareholders. 8) Necessity of the Buy Back The reasons and the need compelling the company to purchase the shares back and reduce its equity 9) Management Discussion and analysis of the likely impact of Buy Back on the Company. * Impact of the Buy Back on the profitability of the Company. * Intention of the Promoters to offer shares held by them under the Buy-back. * The holding of the Promoters before and after the Buy-back. * The holding of public as %age of the total paid up equity share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of PA until 30 days after the closure of the offer. Also ensure that bank guarantee is sought from a bank who is not associate of or group of the Company. * In case, the escrow account , if already opened, consists of a deposit of securities in terms of Regulation 10 (6), give details like name, quantity, face value, paid up value, market price on the date of creation of escrow account, the margin etc. * Disclose that Merchant Banker has been empowered by Company to realise the value of such escrow account, if already opened, by sale or otherwise. Also disclose that if there is any deficit on realisation of value of the securities, the Merchant Banker shall make good any such deficit in accordance with Regulation 10(6). * In case the escrow account, if already opened, consists of a Bank guarantee or deposit of approved securities, disclose the name and address of bank where cash deposit of at least 1% of the total consideration payable, is made in accordance with Regulation 10 (8). * Ensure and disclose that the Company has adequate and firm financial resources to fulfil the obligations under the Buy Back. * Disclose the date of certificate, name, complete address (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns * Any expected benefit to directors/promoters/people in control of the company/group companies should be brought out clearly. 15) Financial Information about the Company * The salient financial information of the Company as extracted from the audited results for the last three years shall be given as below: (in Rs. Lakhs unless stated otherwise) Particulars Year ended … (audited) Total Income Total Expenses Interest Depreciation Profit before tax Provision for tax (including Deferred Tax) Profit /(Loss) after tax Equity share capital Reserves & Surplus* Networth* Total debt(Excluding working capital loans) *Excluding revaluation reserves and miscellaneous expenditure to the extent not written off * Financial Ratios for the last three years shall be given as under; Particulars Year Earnings Per Share (Rs.) Debt Equity Ratio Book Value (Rs. per share) Return on Networth (%) Total Debt / Networth * Declaration that the Company will comply with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997, if applicable * Declaration that the Company has complied with Section 77A (2) (c), (d), 77B (1) and 77B (2) of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uming 100% response to the Offer and if all the shares tendered in response to the Offer are accepted in full. 20) PROCEDURE FOR TENDER / OFFER AND SETTLEMENT * That the Offer is open to all shareholders of the Company as on record date. * That the Letter of Offer and Tender / Offer Form will be mailed to all the shareholders of the Company whose names appear on the Register of Members of the Company and who are beneficial owner/s of shares as per the records made available to the Company by depositories as on Record Date. * That the Company will not accept any shares for Buy-back, in case of court restraints on transfer / sale of shares. * That the Company shall comply with Regulation 19(5) of the regulations. * The company shall accept shares or other specified securities from the security holders on the basis of their entitlement as on record date. * The shares proposed to be bought back shall be divided in to two categories; (a) reserved category for small shareholders and (b) the general category for other shareholders, and the entitlement of a shareholder in each category shall be calculated accordingly. * After accepting the shares or other specified securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholder has expired. c Necessary corporate authorizations, such as Board Resolutions, etc., in case of companies. * That the documents should be submitted to the Collection Centres so as to reach before the close of business hours of the respective Collection Centres on or before the closing date. Shareholders residing at locations where there are no collection centres are requested to tender their response to the Registrar to the Offer. The shareholders should ensure the receipt of the credit in the escrow depository account on or before the last date of the offer * Statements regarding Consideration a It is mandatory for shareholders to indicate the bank account details to which the consideration would be payable at the appropriate place in the Tender / Offer Form. b Mode of payment of Consideration c Tentative date of dispatch of consideration. The payment shall be made by default to the sole/ first shareholder in the bank account, the details of which are recorded with the company/ depository, where such facility is available. The cheques for shareholders residing at places where the facility of transfer of payment is not available should be made payable at par at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Centres on the closing date. * That the shareholders residing at locations where there are no Collection Centers are requested to tender their response to the Registrar to the Offer. * Information regarding the mode of payment to the shareholders whose offer has been accepted by the Company. * Tentative date of dispatch of intimation regarding acceptance or non-acceptance of the shares and the corresponding payment for the accepted shares and / or share certificates for the rejected shares. * The payment shall be made by default to the sole/ first shareholder in the bank account, the details of which are recorded with the company, where such facility is available. The cheques for shareholders residing at places where the facility of transfer of payment is not available should be made payable at par at all the centres where the Company is accepting applications and at mandatory ECS centres. * That it is mandatory for shareholders to indicate the bank account details to which the consideration would be payable at the appropriate place in the Tender / Offer Form. * That the non receipt of this Letter of Offer by, or accidental omission to despatch the Letter of Offer to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isting in repayment of deposits, redemption of debentures or preference shares or repayment of term loans to any financial institutions or banks. ii The Board of Directors confirm that based on a full enquiry conducted into the affairs and prospects of the Company and taking into account all the liabilities including prospective and contingent liabilities payable as if the Company were being wound up under the Companies Act, 1956, the Board of Directors have formed an opinion that a Immediately following the date of the Letter of Offer, there are no grounds on which the Company could be found unable to pay its debts. b As regards its prospects for the year immediately following the date of the Letter of Offer that, having regard to their intentions with respect to the management of the Company's business during the said year and to the amount and character of the financial resources which will be available to the Company during the said year, the Company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date. This declaration is made and issued under the authority of the Board in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timings for inspection. * Certificate of incorporation * Memorandum and Articles of Association of the Company. * Annual Reports for the years last three years. * Resolution approving proposal for Buy-back passed at the meeting of the Board. * Auditors' Certificate as prescribed in clause (xi) of Schedule I, Part A. * Copy of the Public Announcement * Declaration of Solvency and an affidavit verifying the same as per Form 4A of the Companies (Central Government's) General Rules and Forms, 1956. 25) Details of the Compliance Officer * Name * Designation * Name of the company * Address * Telephone number * Fax No. * E-mail address * Days & time when he can be contacted 26) Details of the Remedies available to the Shareholders/ Beneficial Owners * Statement that in case of any grievance relating to the buy back (e.g.: non-receipt of buy back consideration, share certificate, demat credit, etc.) the investor can approach the Compliance Officer of the Manager for redressal. * That if the Company makes any default in complying with the provisions of Section 77 A of the Act or any rules made thereunder, or any regulation made under clause (f) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We undertake to execute any further documents and give any further assurances that may be required or expedient to give effect to my / our tender / offer and agree to abide by any decision that may be taken by the Company to effect the Buy-back in accordance with the Act and the Regulations. 8 Details of shares held and offered for Buy-back: In Figures In Words Number of Shares held Number of Shares Entitled Number of shares offered for Buy-Back 9 Details of account with Depository Participant Name of the Depository (tick whichever is applicable) NSDL CDSL Name of the Depository Participant DP ID Client ID with the DP 10 I / We hereby declare that we have instructed the above-mentioned DP, with whom, I / we hold an account to transfer the number of shares as mentioned under serial number 8 above to (Name of the company) Shares Buy-back Account (Client Id No. --- ---------) held with (Name of the DP) (DP ID. No. ___________). A copy of delivery instruction issued to the DP, duly endorsed by the DP is enclosed. 11 Details of Other Documents (please tick appropriately), if any, enclosed: * Corporate Authorisations * Death Certificate * Succession Certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... struction should be duly endorsed by the DP of shareholder, to whom the original delivery instruction should be handed over. 5 In the delivery instruction please use the "For Off-Market Trades (Receiver Details)" box. Fill in "(Name of DP)" against DP Name, "ID of DP" against the DP ID and "ID of Client" against Client ID. The date of execution entered in the delivery instruction should be after the date of opening of the offer and on or before the last date of submission of the Tender / Offer Form to the Collection Centres or on or before the date of mailing of the Tender / Offer Form to the Registrar to the Offer, as the case may be, but not in any case later than the date of Closure of the Offer. 6 In case of non-receipt of this Letter of Offer, shareholders may send their application in plain paper in writing signed by all shareholders, stating, name, address, number of shares held, client Id number, DP name, DP Id number, number of shares tendered for Buy-back, bank account details together with a copy of the delivery instruction issued to the DP (duly endorsed by the DP) and other relevant documents to the Registrar to the Buy-back Offer (Name of the RTI). 7 Shareholders s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y manner my / our right to tender shares for Buy-back and that I / we am / are legally entitled to tender the shares for Buy-back. 5 I / We agree that the Company is not obliged to accept any shares offered for Buyback where loss of share certificates has been notified to the Company. 6 I / We agree that the Company will pay the Offer Price only after due verification of the validity of the documents and signatures and that the consideration may be paid to the first named shareholder. 7 I / We undertake to return to the Company any Buy-back consideration that may be wrongfully received by me/us. 8 I / We undertake to execute any further documents and give any further assurances that may be required or expedient to give effect to my / our tender / offer and agree to abide by any decision that may be taken by the Company to effect the Buy-back in accordance with the Act and the Regulations. 9 I/ We authorize the company to split the share certificate and issue new consolidated certificate for the unaccepted shares in case the shares accepted by the company are less than the shares tendered in the buy back due to oversubscription. 10 Details of shares held and offered for Buy-b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ……. Shareholders residing at locations where there are no collection centres should send their response to the Registrar to the Buy-back Offer (Name of the RTI). * The relevant Tender / Offer Form duly signed (by all shareholders in case shares are in joint names) in the same order in which they hold the shares. * Original share certificates 4 Shareholders should also provide all relevant documents in addition to the above documents. Such may include (but not limited to): * Duly attested Power of Attorney if any person other than the shareholder has signed the relevant Tender / Offer Form. * Duly attested death certificate / succession certificate in case any shareholder has expired. * Necessary corporate authorisations, such as Board Resolutions, etc., in case of companies. 5 Shareholders to whom the Offer is made are free to tender / offer shares to the extent of their entitlement in whole or in part or in excess of their entitlement. 6 In case of non-receipt of this Letter of Offer, shareholders may send their application in plain paper in writing signed by all shareholders, stating folio number, name, address, number of shares held, share certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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