TMI Blog2001 (8) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... eholding. Castrol (India) Ltd. is a public limited company incorporated in India. Equity shares of Castrol (India) Ltd. are listed on the Stock Exchange, Mumbai and also permitted or trading on the National Stock Exchange. 2. The appellant No. 1 had issued a public announcement by way of a press release on 14-3-2000 whereby it was categorically mentioned that B.P. Amoco had agreed to recommend a cash offer to buy Burmah Castrol for Pound 3 ($ 4.7) billion, in the said press release it was made clear that B.P. Amoco had announced that it was to buy the shares of Burmah Castrol for 3 billion pounds. In the said press release it was made clear that recommended cash offer was 16.75 pound for per share of Burmah Castrol Ltd. and the same has been agreed by both the Boards of B.P. Amoco and Burmah Castrol. Thereafter the necessary approvals from United States of America dated 5-4-2000 and European Commission dated 18-5-2000 were obtained. Subsequent, thereto on 8-6-2000 appellant No. 1 had posted a formal letter of offer to the Burmah Castrol Plc. The said offer was subject to certain conditions one of which was that the said offer would be accepted if there is at least a valid accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-3-2000 and 11-12-2000 in terms of regulation 20(2) and 20(3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ( the SEBI Regulations ) which were applicable. By the said letter it was also made clear that the offer price should be of the highest of the two prices determined under each of the reference dates. 4. The appellants herein aggrieved thereby filed an appeal before the Securities Appellate Tribunal being Appeal No. 11 of 2001 challenging the aforesaid directions of SEBI-respondent No. 1 herein. This appeal was filed on 23-2-2000. It appears that subsequent thereto the respondent No.1 SEBI had sent detailed reasonings dated 8-3-2001 for the aforesaid communication dated 16-2-2001. By the said letter dated 8-3-2001. The SEBI had given detailed reasonings interpreting the provisions of regula-tions 12, 14(3) and regulation 20 of the SEBI Regulations holding that the relevant date for the purposes of acquisition was 14-3-2000 and not 7-7-2000 as contended by the appellant. 5. The Appellate Tribunal after a detailed hearing passed a reasoned order on 27-4-2001 dismissing the appeal filed by the appellants herein by holding that the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in accordance with the regulations. Explanation ( b ) to section 11 of the SEBI Act very specifically provides that for the purposes of regulations 10 and 11, acquisition shall mean and include indirect acquisition by virtue of holding companies, whether listed or unlisted, whether in India or abroad. Regulation 12 deals with acquisition of control over the target company, which reads as under : " Acquisition of control over a Company. Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the regulations : Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a resolution passed by the shareholders in a general meeting." Regulation 14(3) deals with timing of the public announcement of offer, which reads as under : "(3) The public announcement referred to in regulation 12 shall be made by the merchant banker not later than four working days after any such change or changes are decided to be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, being a natural person, has died; ( d )such circumstances as in the opinion of the Board merits withdrawal. 9. Shri Setalvad, the learned counsel for the appellant contended that the relevant date for the purposes computing the minimum offer price ought to be 7-7-2000 and not 14-3-2000. The learned counsel has contended that both the respondent No. 1 as well as respondent No. 2 had erred in holding that 14-3-2000 was the relevant date for the purposes of determining the minimum offer price. The main submission of the learned counsel for the appellant is that the appellant did not at any time had an intention to acquire control over Castrol (India) Ltd. and that it was an incidental and unintended consequence of acquisition of Burmah Castrol Plc. Shri Setalvad, therefore, contended that as a result of the said unintended consequence by 7-7-2000, Burmah Castrol Plc. had acquired control over Castrol (India) Ltd. and as on that date, i.e. , 7-7-2000 it had acquired control over Castrol (India) Ltd. that should be the relevant date. Any date prior thereto should not be construed as a date on which the appellant had decided the acquiring control over the said Castrol (India) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re sought to be acquired. Unless and until that takes place the appellant can never be construed as an acquirer as per regulation 2(1)( b ). Shri Setalvad, therefore, contended that the announcement on 14-3-2000 was to the effect that Burmah Castrol Plc. had agreed to recommend the offer which was made by the appellants to the shareholders of the said company. According to the learned counsel, that decision of the board of directors of B.P. Plc. could not be said to be an acceptance of the appellants offer. According to the learned counsel, the acceptance can only be by the shareholders and by no else and unless and until the shareholder entered into an actual agreement there can never be any acceptance. Therefore, Shri Setalvad contended that the relevant date taken as 14-3-2000 was totally incorrect inasmuch as there is no agreement to acquire control on that date because it was a mere offer and if at all there is any agreement to acquire control, the relevant date could only be 7-7-2000. According to the learned counsel the regulation 14(3) which deals with the public announcement of offer came into play only when an offer is made by an acquirer, i.e., to say a person who has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred against the said order dated 23-7-2001 before the Securities Appellate Tribunal. In view thereof we are not going into the said letter dated 23-7-2001. 15. Shri Goolam Vahanvati, the learned Advocate General appearing on behalf of the respondent No. 1 had strongly contended that the order passed by the SEBI on 16-2-2001 and the order passed by the Securities Appellate Tribunal dated 27-4-2001 were perfectly valid and proper. Shri Vahanvati pointed out that on 14-3-2000 when the public announcement was made by way of a press release, it was categorically mentioned therein that B.P. Amoco has already agreed to buy Burmah Castrol for 3 billion Pound (4.7 billion dollars). He also pointed out that the said press release makes it abundantly clear that even the price of each share was calculated at Pound 16.75 per share. The said press release also mentions of tax savings of 260 million Pounds by the year 2003. The said announce- ment makes it clear that both the boards B.P. Amoco as well as Burmah Castrol had agreed fully and recommended a cash offer of 16.75 Pound per share. In the said announcement there is a clear mention that following the acquisition of Castrol Ltd., B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Burmah Castrol. Credit Suisse First Boston Cazenove Co. are acting as joint brokers to Burmah Castrol." 16. The learned counsel Shri Goolam Vahanvati strongly contended that it is very clear that on 14-3-2000 the decision was already taken to acquire and there was a clear agreement between B.P. Amoco and Burmah Castrol, even the price factor was already decided, each share s price was indicated. The board of directors of Burmah Castrol had agreed to sell their shares. Over and above Shri Vahanvati laid emphasis that the very announcement makes it clear that only a formal document will be sent to the Burmah Castrol shareholders when the regulatory offers are ob- tained. Therefore, offer was virtually unconditional excepting that the necessary regulatory approvals. In the instant case necessary regulatory approvals were already obtained. Therefore, the expression used as a formal offer document will be sent was already decided and made and a formal document was only required to be sent. Shri Vahanvati also brought to our notice that as per regulation 16 ( xvi ) of the SEBI Regulations statutory approval is required for the purposes of acquiring monopoly companies. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire control over the target company" and the said definition would have been totally different. Shri Vahanvati pointed out that there is no dispute that Castrol India was a target company and on 14-3-2000 a conscious decision was taken after taking into account all factors and circumstances and in detail the said public announcement mentions all pros and cons and thereafter the appellants cannot retract by saying that the decision is yet to be taken or these provisions can only apply only after acquiring control. Shri Vahanvati contended that main purpose of the SEBI Regulations is to have a check and control and act as watchdog to regulate such acquisitions as well as takeovers and if it were to be interpreted in a contrary manner than these Regulations will come into play only after a person acquires shares then there was no necessity to have such Regulations at all. 17. Shri Vahanvati has also contended that the appellants though initially had applied for exemption, they had themselves withdrawn the application for exemption, hence they are governed by the SEBI Act and they are bound to get the necessary clearance from the SEBI. 18. Shri Vahanvati has also pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations will apply even in case of a person agrees to acquire or agrees to take control over the target company. It cannot be interpreted to mean only after acquisition or after taking control over the target company. Shri Vahanvati, therefore, contended that both the respondent No. 1 and respondent No. 2 have rightly concluded the relevant date as 14-3-2000 when the conscious decision was taken to acquire and to take control over the target company. 21. After giving a deep consideration to the above submissions of both the counsel and in the light of the provisions of the SEBI Regulations, we find that the word acquirer could not be interpreted to mean only a person who has already acquired shares. On the contrary the definition of acquirer in regulation 2( b ), clearly mentions "acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company". From the above it is very clear that even someone who "agrees to acquire shares or voting rights" or "agrees to acquire control over the target company" would come within the definition of acquirer . Therefore it is explicitly apparent and clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent even before obtaining the required regulatory approval. 26. The decision to acquire control over the target company is very apparent and clear from the public announcement made on 14-3-2000 and not on 7-7-2000 as contended by Mr. Setalvad. 27. Similarly the contention of Mr. Setalvad that change or changes must relate to a change in control over the target company cannot be accepted, as regulation 14 contemplates such change or changes as would result in the acquisition of control over the target company, that is what is expected to happen in future and not what has already taken place. 28. Even factually, from the press release dated 14-3-2000, it is very clear that a decision was already taken to acquire control over the target company and the said decision is very clear and unambiguous. 29. Under the aforesaid facts and circumstances, we are clearly of the view that the relevant date as per SEBI Regulation 20(2)( b ) would be 14-7-2000 and not 7-7-2000. 30. We have perused the order passed by the SEBI as well as the Securities Appellate Tribunal. We find that the Tribunal has in detail analysed the meaning of word acquirer and also regulations 12, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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