The Securities and Exchange Board of India has made amendments to the takeover code and broadened the definition of promoter.
Now, any company in which a group of individuals or companies hold 20 per cent or more of the equity capital in that company and also hold 20 per cent or more of the equity capital of the target company, would qualify as part of the promoter group.
In case the promoter is a body corporate, any company in which the promoter holds 10 per cent or more of the equity capital or which holds 10 per cent or more of the equity capital of the promoter would qualify as promoter group.
Definition of individual promoter has been altered to include any person who is in control of the target company or 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 according to the listing agreement, whichever is later.
Today's notification also seeks to align the acquisition and takeover code with the recent changes to the listing agreement relating to minimum public shareholding.
The notification says that no acquirer, (including persons acting in concert) who holds 55 per cent or more but less than 75 per cent of the shares or voting rights in a target company, shall acquire any additional shares or voting rights, unless he makes a public announcement to acquire shares in accordance with these regulations.
In cases where the target company had obtained listing of its shares by making an offer of at least 10 per cent of issue size to the public or in cases relaxations have been granted from this rule, the upper limit of share holding would be 90 per cent, instead of 75 per cent.
The notification also says that once an announcement of a public offer is made, then no other routes of acquiring shares can be taken including buying in the open market negotiations of any other manner.
Where a public offer is made, the minimum size of the public offer shall be the lesser of the following; 20 per cent of the voting capital of the company; or the percentage of voting capital that would enable the acquirer to increase his holding to the maximum level possible, which is consistent with the minimum public shareholding laid down in the listing agreement.
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