INSUBCONTINENT EXCLUSIVE:
SEBI has amended rules to make mergers and acquisitions easierTo make mergers and acquisitions transactions easier for listed entities,
markets regulator Securities and Exchange Board of India (SEBI) has amended rules related to it.It said through a note that rules pertaining
to delisting of equity shares of a company following an open offer have been amended in an effort to make merger and acquisition
transactions for listed companies more convenient.To implement these rules, SEBI has amended the SAST (Substantial Acquisition of Shares and
These rules came into effect from Monday, December 6.Under the new framework, promoters or acquirers need to disclose their intention to
delist the firm through an initial public announcement, the SEBI notification said.If the acquirer is desirous of delisting the target
company, the acquirer must propose a higher price for delisting with suitable premium over open offer price, it said.In case the open offer
is for an indirect acquisition, the open offer price and indicative price will be notified by the acquirer at the time of making the
detailed public statement and in the letter of offer."The indicative price shall include a suitable premium reflecting the price that the
acquirer is willing to pay for the delisting offer with full disclosures of the rationale and justification for the indicative price so
framework, if an open offer is triggered, compliance with takeover regulations could take the incoming acquirer's holding to above 75 per
cent or perhaps even 90 per cent.However, to ensure compliance with the Securities Contract (Regulation) Rules, the acquirer would be forced
holding is first brought down to 75 per cent.The revised framework aims to make merger and acquisition (M-A transactions) for listed
that if the response to the open offer leads to the delisting threshold of 90 per cent being met, all shareholders who tender their shares
would be paid the indicative price.In case the response to the offer leads to the delisting threshold of 90 per cent not being met, all
shareholders who tender their shares would be paid the open offer price.If a company does not get delisted following an open offer under
this framework, and the acquirer crosses 75 per cent due to the open offer, a period of 12 months from the date of completion of the open
offer will be provided to the acquirer to make further attempts to delist the company using the reverse book building mechanism.Such further
delisting attempt will be successful if 50 per cent of the residual public shareholding is acquired and delisting threshold is met.
