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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 ..... nexure-A. 3. This circular shall come into force with immediate effect. 4. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten working days. 10. Merchant Banker shall submit the Due Diligence Certificate in terms of Regulation 20(f) of the Regulations to Board along with the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents thereof. A statement that a copy of public announcement and Letter Of Offer (including form of acceptance cum acknowledgment) is also available on SEBI s web-site (www.sebi.gov.in), Information regarding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25) Details of the Compliance Officer 26) Details of the Remedies available to the Shareholders/ Beneficial Owners 27) Details of Investor Service Centres 28) Details of the Manager to the Buy Back 29) Declaration by the Directors regarding authenticity of the information in the offer document 30) Offer Form 1) Schedule of activities Date of Board meeting approving Buy Back Date of Public Announcement for Buy Back Record Date Buy Back Opening date Buy Back Closing date Last date of Verification Last date of intimation regarding acceptance/ non- acceptance Last date of dispatch of consideration/ share certificate/ demat instructions Last date of extinguishment of shares 2) Definition of key terms Definitions of the specialized terms used in the Letter of Offer for easy unders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Companies Act. The filing of offer document with SEBI, does not, however, absolve the company from any liabilities under the Provisions of the Companies Act, 1956 or from the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed buy back. Promoters / Directors declare and confirm that no information / material likely to have a bearing on the decision of investors has been suppressed / withheld and / or incorporated in the manner that would amount to mis-statement / misrepresentation and in the event of it transpiring at any point of time that any information / material has been suppressed / withheld and / or amounts to a mis-statement / mis-representation, the promoters / directors and the company shall be liable for penalty in terms of the provisions of the companies Act, 1956 and the SEBI (Buy Back of Securities) Regulations, 1998. Promoters / Directors also declare and confirm that funds borrowed from Banks and Financial Institutions will not be used for the buy-back. 4) Text of the Resolution passed at the Board meeting Give the detailed text of the resolution passed at the meeting of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Salient Financial parameter consequent to the Buy Back based on the Latest audited results as under: Parameter (based on audited results for year ended ) Pre Buy-back Post Buy-back Networth* (Rs. Lakhs) Return on Networth* Earnings per Share (Rs.) Book Value per Share (Rs.)* P/E as per the latest audited financial results Total Debt / Equity Ratio* *Excluding revaluation reserves and miscellaneous expenditure to the extent not written off 10) Basis of calculating Buy Back Price The basis on which the buy back Price has been arrived at must be disclosed. Justification of the offer price taking into account the following may be disclosed; Trends in the market price of the equity shares of the Company. The closing market price of the equity shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of the Chartered Accountant certifying the adequacy of financial resources of Company for fulfilling all the obligations under the offer. Ensure and disclose that Merchant Banker has satisfied himself about the ability of the Company to implement the offer in accordance with the Regulations. 13) Capital Structure Shareholding pattern The present authorized capital of the Company. The present issued, subscribed and paid-up equity share capital of the Company. Details of the buyback programme in the last three years, opening and closing date. Details of partly paid shares. Details of calls in arrears. Details of all other outstanding convertible securities. Price to be paid for the convertible securities. The shareholding pattern of the Company before and after the Buy-back Offer (assuming full subscription of the Buy-back Offer) shall be given as below: Pre-Buy-back Post Buy-back Particulars No. of Equity Shares % to the existing equity share capital No. of Equity Shares % to post Buy-back equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of the collection centres Place Address Contact Person Telephone/ Mobile Number E-mail address of contact person Fax No. Days Timing of acceptance Mode of Delivery Instruction, regarding submission, for shareholders residing at places other than collection centres mentioned above 19) Process and methodology for the Buy Back Maximum number of shares to be bought back Shares to be bought back as %age of the existing paid-up capital of the Company Maximum price offered per share Mode of payment of consideration Relevant clause of Companies Act Route to be followed for the Buy-back The total amount to be expended towards Buy-back Amount to be spent as %age of the paid-up share capital and free reserves of the Company. Holding of the promoters as %age of the paid-up equity share capital of the Company. Intention of the Promoters to tender their shares in the proposed Buy-back Offer. Holding of the promoters in number and as %age of the paid-up equity share capital of the Company assuming 100% response to the Offer and if all the shares tendered in response to the Offer are accepted in full. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they hold the shares. b Copy of the delivery instruction issued by shareholders to their DP for transferring the shares tendered for Buy-back to the Company's DP account. Copy of the delivery instruction should be duly acknowledged by the DP of shareholder, to whom the original Delivery Instruction should be handed over. That in the delivery instruction use the For Off-Market Trades (Receiver Details) in the relevant box and fill in the name of the DP, ID of DP Client ID at the relevant places. 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. That the Shareholders should also provide all relevant documents in addition to the above documents. Such may include (but not limited to): a Duly attested Power of Attorney, if any person other than the shareholder has signed the relevant Tender / Offer Form. b Duly attested death cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny are advised to safeguard adequately their interests in this regard. For shareholders holding shares in physical form That the 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. That the Shareholders of the Company who wish to tender / offer their shares in response to this Buy-back Offer should deliver the following documents: a The relevant Tender / Offer Form duly signed (by all shareholders in case the shares are in joint names) in the same order in which they hold the shares. b Original share certificates. That the Shareholders should also provide all relevant documents in addition to the above documents. Such may include (but not limited to): a Duly attested Power of Attorney if any person other than the shareholder has signed the relevant Tender / Offer Form. b Duly attested death certificate and succession certificate/ legal heirship certificate in case any shareholder has expired. c Necessary corporate authorisations, such as Board Resolutions, etc., in case of companies. That the documents should be sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised dealer / bank confirming that at the time of acquiring the said shares, payment for the same was made by the non resident shareholder from the appropriate account (e.g. NRE a/c) as specified by RBI in its approval. In case the non resident holder is not in a position to produce the said certificate, the shares would be deemed to have been acquired on non-repatriation basis and in that case the holder shall submit a consent letter addressed to the Company, allowing the Company to make the payment on a non-repatriation basis in respect of the valid shares accepted under the Offer. If any of the above stated documents (as applicable) are not enclosed along with the Tender/ Offer Form, the shares tendered under the Buy-back Offer are liable to be rejected. 21) Note on Taxation In respect of Shareholder, non resident shareholders and the Company The extract of all applicable sections of Income Tax Act 1961 as amended by Finance Act 1999, relating to treatment in case of buyback of shares shall be given 22) Declaration by the Board of Directors Declaration as required under clause (ix) and (x) of Schedule II, Part A to the Securities and Exchange B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jections for the year .. as approved by the Board of Directors. ii) The amount of permissible capital payment towards buy-back of equity shares (including premium) in question as ascertained below in our view has been properly determined in accordance with Section 77 A (2) (b) of the Companies Act, 1956: Rs. in lacs Paid up Share Capital as on Free reserves as on . Total Maximum amount permitted for Buy-back i.e. 10% of the total paid up capital and free reserves Based on the representations made by the Company and other information and explanations given to us, which to the best of our knowledge and belief were necessary for this purpose, we report that we are not aware of anything to indicate that the opinion expressed by the Directors in the declaration as to any of the matters mentioned in the declaration as approved by the Board of Directors in their meeting held on . is unreasonable in all the circumstances in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29) Offer Form TENDER / OFFER FORM (FOR SHAREHOLDERS HOLDING SHARES IN DEMATERIALISED FORM) To For Collection Centre use The Board of Directors Centre Code Inward No. Date Stamp Name of the company Phone No.: Fax No. : Dear Sirs Date ----------- Ref: Letter of Offer dated to buy back shares of (Name of the Company) 1 I / We (having read and understood the Letter of Offer dated .. hereby tender / offer my/our shares in response to the Buy-back Offer on the terms and conditions set out below and in the Letter of Offer. 2 I / We authorise the Company to buy back the shares offered (as mentioned below) and to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the DP is enclosed. 11 Details of Other Documents (please tick appropriately), if any, enclosed: Corporate Authorisations Death Certificate Succession Certificate Power of Attorney Any Other, please specify______________________________ 12 Details of Bank Account of the Sole / First Shareholder to be incorporated in the consideration warrant. (to be mandatorily filled) Name of the Bank Branch and City Account Number (Indicate type of Account) 13 Shareholder(s) details: Sole / First Shareholder Second holder (if any) Third holder (if any) Name in Full Signature Address of the Sole / First Shareholder Telephone No./ E mail id ------------------------------------------------------------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 should also provide all relevant documents in addition to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horise the Company to buy back the shares offered and as a consequence to extinguish the share certificates. 3 I / We hereby warrant that the shares comprised in this tender / offer are offered for Buy-back by me / us free from all liens, equitable interest, charges and encumbrance. 4 I / We declare that there are no restraints / injunctions or other order of any nature which limits / restricts in any 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 ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be incorporated in the consideration warrant (to be mandatorily filled) Name of the Bank Branch and City Account Number ( Indicate type of account) 14 Shareholder(s) details (Signature(s) as per specimen recorded with the Company): Sole / First Shareholder Second holder (if any) Third holder (if any) Name in Full Signature Address of the Sole / First Shareholder Telephone No. /E Mail ---------------------------------------------------------------------------------------- (Name of the company) BUY-BACK OFFER-ACKNOWLEDGEMENT (to be filled by the shareholder) Received from Mr/Ms___________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ _____ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , distinctive numbers, number of shares tendered for Buy-back, bank account details together with the original share certificates and other relevant documents to the Registrar to the Buy-back Offer. 7 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. 8 All documents sent by shareholders will be at their own risk. Shareholders of the Company are advised to safeguard adequately their interests in this regard. 9 Note: Any shareholder should tender only one form, irrespective of the number of folios he holds. Multiple applications tendered by any shareholder shall be liable to be rejected. Also, multiple tenders from the same depository account or same registered folio shall also be liable to be rejected ALL FUTURE CORRESPONDENCE IN CONNECTION WITH THIS BUY-BACK OFFER SHOULD BE ADDRESSED TO THE REGISTRAR TO THE BUY-BACK OFFER (Name of the RTI) QUOTING YOUR FOLIO NUMBER. ********** - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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