SEBI Takeover Regulations Amended in line with Companies Act; Fugitive Economic Offenders prohibited to make a Public Announcement

SEBI has amended the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 on September 11, 2018 (“Regulations”) by passing the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2018 (“Amendment Regulations”).

The changes made by the Amendment Regulations are as follows:

  • The definitions of fugitive economic offender, listing regulations and postal ballot has been added in the Regulations.
  • As per the Regulations, if the acquirer makes a public announcement of an ‘open offer’ for acquiring shares of a target company, he maydelist the company in accordance withSEBI (Delisting of Equity Shares) Regulations, 2009. As per the Amendment Regulations, in the event of failure of the delisting offer made by the acquirer, the obligations under the open offer shall be fulfilled by the acquirer in the following manner:
    • The acquirer has to file with SEBI, a draft of the open offerletter as specified, within 5 working days from the date of announcement made by the acquirer of such failure.
    • The offer price will be increased at the rate of 10% p.a. for the period between the scheduled date of payment of consideration to the shareholders and the actual date of such payment.
  • Fugitive economic offenders are not allowed to make a public announcement of an open offer or make a competing offer for acquiring shares or enter into any transaction, either directly or indirectly under the Amendment Regulations.
  • The time given to acquirers to make revisions in their previously made offers has been decreased from 3 working days to 1 working day.
  • There have been made universal changes in the Regulations to bring them in compliance with Companies Act, 2013 instead of Companies Act, 1956.