Creeping acquisition
limit for fresh acquisition by promoters temporarily increased to 10% under the
SEBI Takeover Code
limit for fresh acquisition by promoters temporarily increased to 10% under the
SEBI Takeover Code
SEBI increases creeping
acquisition limit up to 10% for acquisition of shares by promoters through
preferential issue without making an open offer under Takeover Code
acquisition limit up to 10% for acquisition of shares by promoters through
preferential issue without making an open offer under Takeover Code
Currently, under
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 (Takeover Code), acquirer together with persons
acting with him (PAC), who holds 25% or more of voting rights in the target
company but less than the maximum permissible non-public shareholding
(presently at 75%), are allowed to acquire additional shares or voting rights
up to 5% of the voting rights (creeping acquisition) in any financial year (1
April to 31 March) without having to make an open offer.
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011 (Takeover Code), acquirer together with persons
acting with him (PAC), who holds 25% or more of voting rights in the target
company but less than the maximum permissible non-public shareholding
(presently at 75%), are allowed to acquire additional shares or voting rights
up to 5% of the voting rights (creeping acquisition) in any financial year (1
April to 31 March) without having to make an open offer.
Regulation 6 of Takeover
Code ,2011
Code ,2011
Under Regulation 6,
acquirer together with PAC who holds 25% or more of voting rights in the target
company but less than the maximum permissible non-public shareholding, are not allowed to make voluntary open offer (minimum
10%) to acquire additional shares in accordance with Takeover Code, if they
have acquired shares without attracting the obligation to make a public
announcement of an open offer in the preceding 52 weeks.
acquirer together with PAC who holds 25% or more of voting rights in the target
company but less than the maximum permissible non-public shareholding, are not allowed to make voluntary open offer (minimum
10%) to acquire additional shares in accordance with Takeover Code, if they
have acquired shares without attracting the obligation to make a public
announcement of an open offer in the preceding 52 weeks.
Amendments to Takeover
Code by SEBI:
Code by SEBI:
Increase in creeping acquisition
limit for acquisition through preferential issue to promoters by the target
company Securities and Exchange Board of India (SEBI) has, on 16 June 2020, amended
Takeover Code allowing promoters who hold 25% or more of shares or voting
rights in the target company but less than the maximum permissible non-public
shareholding, to acquire additional shares or voting rights up to 10% of the
voting rights through preferential issue of equity shares, without triggering
an open offer.
limit for acquisition through preferential issue to promoters by the target
company Securities and Exchange Board of India (SEBI) has, on 16 June 2020, amended
Takeover Code allowing promoters who hold 25% or more of shares or voting
rights in the target company but less than the maximum permissible non-public
shareholding, to acquire additional shares or voting rights up to 10% of the
voting rights through preferential issue of equity shares, without triggering
an open offer.
This relaxation can be availed during the financial year
2020-21 i.e. 1 April 2020 to 31 March 2021.
2020-21 i.e. 1 April 2020 to 31 March 2021.
Voluntary
open offer
open offer
SEBI has also permitted
acquirer and PAC holding 25% or more of the shares or voting rights in the target
company, but less than the maximum permissible non-public shareholding, who have acquired shares
without attracting the obligation to make a public announcement of an open
offer in the preceding 52 weeks, to make a voluntary open offer till 31 March
2021.
acquirer and PAC holding 25% or more of the shares or voting rights in the target
company, but less than the maximum permissible non-public shareholding, who have acquired shares
without attracting the obligation to make a public announcement of an open
offer in the preceding 52 weeks, to make a voluntary open offer till 31 March
2021.
Opportunity to Promotors
of Listed Companies
of Listed Companies
The above relaxation by
SEBI comes at an opportune time when businesses are under economic stress and in need of
capital to tide over the Covid-19 crisis. It would assist the listed entities to raise additional
equity funds from promoters for their business needs without triggering
an open offer under the Takeover Code. It also permit promoters to increase
their shareholding in the target company up to 10% in the financial year
2020-21, under the creeping acquisition route through preferential issue
without making an open offer.
SEBI comes at an opportune time when businesses are under economic stress and in need of
capital to tide over the Covid-19 crisis. It would assist the listed entities to raise additional
equity funds from promoters for their business needs without triggering
an open offer under the Takeover Code. It also permit promoters to increase
their shareholding in the target company up to 10% in the financial year
2020-21, under the creeping acquisition route through preferential issue
without making an open offer.
Right time for promoters
to fund the growth of the company on one hand and to also increase their
shareholding in the company in another hand.
to fund the growth of the company on one hand and to also increase their
shareholding in the company in another hand.
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