INTER-SE TRANSFER - TakeoverCode.com TRANSFER Understanding the Concept … Updated as per last...
Transcript of INTER-SE TRANSFER - TakeoverCode.com TRANSFER Understanding the Concept … Updated as per last...
INTER-SE TRANSFER
Understanding the Concept …
Updated as per last amendment in SEBI (Substantial
Acquisition of Shares and Takeover) Regulations, 1997
dated 13.02.2009
Meaning of Exemption …
Regulation 3:
“Nothing contained in regulations 10, 11 and 12 of these regulations shall
apply to...” contd..
Thus, the term exemption means non-applicability of regulation 10, 11 and 12
which requires the acquirer to make open offer.
Exemption from OPEN OFFER
An insight into Regulation 10, 11 and12
Regulation Existing holding (Any person already holding…) Shall not
acquire
shares or
voting
rights
entitling
him to
exercise
Maximum Allowable Holding
10 0-15% 15% or more voting rights
11(1) 15%-55% Additional 5% or more voting
rights
11(2) 55%-75% Additional 5% or more voting
rights by way of open market
acquisition or Buy-Back, or
Any Single additional voting
right through any other mode.
12 Shall not acquire control over the target company
Unless such person makes a PUBLIC ANNOUNCEMENT OF OPEN OFFER to
acquire such shares in accordance with the regulations.
What is Open Offer
An Exit Opportunity in the form of an offer to the shareholders of the target
company to sell their shares to the acquirer if they don’t want to continue
with the new management [acquirer].
Appointment
of Merchant Banker
Opening of
Escrow Account
Public
Announcement of offer
Submission of Letter of Offer to SEBI and its
Clearance
Issue of
Corrigendum to the offer
Opening of
offer
Closing of
Offer
Payment of
consideration
Issue of Post-offer public
announcement
Open offer
Process
Inter-se transfer
Categories of Inter-se transfer
IST amongst GROUP
IST amongst RELATIVES
IST amongst Foreign
Collaborator shareholder
and Qualifying Promoters
IST amongst QUALIFYING ROMOTERS
IST amongst ACQUIRER &
PAC
Inter-se Transfer amongst Group
Meaning of Group
(As defined under MRTP Act, 1959)
Group
Joint Exercise of Control over any Body Corporate, firm or trust, by
Two or more
Individuals, AOI, Firms, Trust, Trustee, Body Corporate
Combination of above.
Associated Persons
Next slide
Group
Associated Persons
Director of a Body
Corporate
Relative of Director
Firm, in which such
director/relative is partner
Trust in which such director/relative is trustee
Company of which such director, whether independently or together with his
relatives, constitutes one-fourth of its board of directors
A body Corporate at which min. 1/4th directors are appointed by such
director/relative
Partner of a Firm
Other Partners
Relative
Trustee of a Trust
Other trustees
IST amongst Group – Eligibility Criteria
• The transferor and transferee falls within the definition of Group
• The transferor and transferee have been shown as group in Last Published Annual
Report of the Target Company.
• The transferor and transferee have made due disclosures under regulation 6, 7
and 8, as may be applicable.
IST Amongst Group - Compliances
• The transferor and transferee have made due disclosures under regulation 6, 7
and 8, as may be applicable, pursuant to this acquisition.
• The transferee has given an advance intimation to the stock exchange u/r 3(3)
atleast 4 working days in advance of acquisition, where such acquisition exceeds
5% of the voting share capital of the Target Company.
• The transferee has filed a report toSEBI u/r 3 (4) within 21 days of the date of
acquisition, where such acquisition, taken together with the shares or voting
rights already held, entitles the acquirer to exercise 15 per cent or more of the
voting rights in the Target company.
• Alongwith the report, the transferee has paid a fee of Rs. 25000 to the Board
Inter-se transfer amongst Relatives
Meaning of Relative
(As defined under Section 6 of the Companies Act, 1956)
Relatives defined under Schedule 1A includes Father, Mother (including step-mother), Son (includingstep-son), Son's wife, Daughter (including step-daughter), Father's father, Father's mother, Mother'smother, Mother's father, Son's son, Son's Son's wife, Son's daughter, Son's daughter's husband,Daughter's husband, Daughter's son, Daughter's son's wife, Daughter's daughter, Daughter's daughter'shusband, Brother (including step-brother), Brother's wife, Sister (including step-sister), Sister's husband.
Relatives
Spouse Members of HUFRelatives defined
under Schedule 1A
IST amongst Relatives – Eligibility
Criteria
• The transferor and transferee falls within the definition of Relative
• The transferor and transferee have made due disclosures under regulation 6, 7
and 8, as may be applicable.
IST Amongst Relatives- Compliances
• The transferor and transferee have made due disclosures under regulation 6, 7
and 8, as may be applicable, pursuant to this acquisition.
• The transferee has given an advance intimation to the stock exchange u/r 3(3)
atleast 4 working days in advance of acquisition, where such acquisition exceeds
5% of the voting share capital of the Target Company.
• The transferee has filed a report toSEBI u/r 3 (4) within 21 days of the date of
acquisition, where such acquisition, taken together with the shares or voting
rights already held, entitles the acquirer to exercise 15 per cent or more of the
voting rights in the Target company.
• Alongwith the report, the transferee has paid a fee of Rs. 25000 to the Board
IST Amongst Foreign Collaborators and Qualifying
Promoters or amongst Qualifying Promoters
Meaning of Qualifying Promoter
As defined under Explanation to Regulation 3 (1) (e) (iii)
Who is a Qualifying Promoter?
Primary Category:
(i) Any person who is directly or
indirectly in control of the
company; or
(ii) Any person named as
promoter in any document for
offer of securities to the
public or existing shareholders
or in the shareholding pattern
disclosed by the company
under the provi-sions of the
Listing Agreement, whichever
is later.
Body CorporateIndividual
Relative Its subsidiary or holding
company
Firm or Company
controlled by
Qualifying
Promoter
Qualifying
Promoter of
the Body
corporateRelative, Firm or HUF in
which the of Promoter
is a partner or
coparcener
Secondary Category
Qualifying Promoter
IST Amongst Foreign Collaborators and Qualifying Promoters
or amongst Qualifying Promoters – Eligibility Criteria
• The transferor and transferee falls within the definition of Qualifying Promoter
• The transferor and transferee have a prior shareholding for atleast 3 years in the
Target Company.
• The price of inter-se transfer does not exceed 25% of the price as determined in
terms of sub-regulations (4) and (5) of regulation 20.
• The transferor and transferee have made due disclosures under regulation 6, 7
and 8, as may be applicable.
IST Amongst Foreign Collaborators and Qualifying
Promoters or amongst Qualifying Promoters – Compliances
• The transferor and transferee have made due disclosures under regulation6, 7 and 8, as may be applicable, pursuant to this acquisition.
• The transferee has given an advance intimation to the stock exchange u/r3(3) atleast 4 working days in advance of acquisition, where suchacquisition exceeds 5% of the voting share capital of the Target Company.
• The transferee has filed a report to SEBI u/r 3 (4) within 21 days of thedate of acquisition, where such acquisition, taken together with theshares or voting rights already held, entitles the acquirer to exercise 15per cent or more of the voting rights in the Target company.
• Alongwith the report, the transferee has paid a fee of Rs. 25000 to theBoard
IST Amongst Acquirer and PAC
Meaning of Acquirer and PAC:
The term Acquirer and PAC here means the persons who have been shown
as Acquirer and PAC in any public offer previously made by them under these
regulations.
IST Amongst Acquirer and PAC –
Eligibility Criteria
• The transferor and transferee have been shown as Acquirer and PAC in any public
offer previously made by them under these regulations.
• The transfer of shares takes place 3 years after the date of closure of such public
offer.
• The price of inter-se transfer does not exceed 25% of the price as determined in
terms of sub-regulations (4) and (5) of regulation 20.
• The transferor and transferee have made due disclosures under regulation 6, 7
and 8, as may be applicable.
IST Amongst Acquirer and PAC –
Compliances• The transferor and transferee have made due disclosures under regulation
6, 7 and 8, as may be applicable, pursuant to this acquisition.
• The transferee has given an advance intimation to the stock exchange u/r3(3) atleast 4 working days in advance of acquisition, where suchacquisition exceeds 5% of the voting share capital of the Target Company.
• The transferee has filed a report to SEBI u/r 3 (4) within 21 days of thedate of acquisition, where such acquisition, taken together with theshares or voting rights already held, entitles the acquirer to exercise 15per cent or more of the voting rights in the Target company.
• Alongwith the report, the transferee has paid a fee of Rs. 25000 to theBoard
Comparative Analysis of Eligibility
Criteria for Inter-se TransferConditions Category I
(Group)
Category II
(Relative)
Category III
(Qualifying
Promoter)
Category IV
(Acquirer &
PAC)
Meaning of Category Section 2
(ef) of MRTP
Act, 1969
Section 6 of
the
Companies
Act, 1956
Explanation to
regulation 3
(1) (e) (iii) of
SEBI Takeover
Code
Regulation
3 (1) (e)
(iv) of SEBI
Takeover
Code
Disclosure in Last Published
Annual Report
Yes No No No
3 years’ holding of shares by
Transferor & Transferee
No No Yes Yes
Price Restriction of 25% No No Yes Yes
Compliance of Regulation 6,
7 & 8.
Yes Yes Yes Yes
Other Automatic Exemptions under SEBI
Takeover Code
Automatic Exemptions
Exemptions requiring no compliance
By underwriters
In ordinary course of business
Pursuant to public offer
By transmission on succession or inheritance
From VC funds
Pursuant to Merger of Scheme under SICA
Under SARFESI Act
Shares in Unlisted Company
Under Delisting Guidelines
Exemptions Requiring Compliance
Compliance of Regulation 3 (3)
Inter-se Transfer
Acquisition by Govt. Company
From State Level Financial Institution
Compliance of Regulation 3 (4) & 3(5)
In public issue
In Right Issue
Inter-se transfer
From State Level Financial Institution
Compliance for Automatic Exemption –
Compliance Details• Regulation 3 (3) - The transferee shall give an advance intimation to the stock
exchange atleast 4 working days in advance of acquisition, where such acquisition
exceeds 5% of the voting share capital of the Target Company.
• Regulation 3 (4) - The transferee shall file a report toSEBI u/r 3 (4) within 21 days
of the date of acquisition, where such acquisition, taken together with the shares
or voting rights already held, entitles the acquirer to exercise 15 per cent or more
of the voting rights in the Target company.
• Regulation 3 (5) - Alongwith the report, the transferee shall pay a fee of Rs. 25000
to the Board
For any Clarification
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