Regulation 5A - Delisting Offer. - Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

4 [ Delisting Offer. 5A. (1) Notwithstanding anything contained in these regulations and the Delisting Regulations, in the event the acquirer makes a public announcement of an open offer for acquiring shares or voting rights or control of a target company in terms of sub-regulation (1) of regulation 3, regulation 4 or regulation 5, the acquirer may seek the delisting of the target company by making a delisting offer in accordance with this regulation: Provided that the acquirer shall have declared his intention to so delist the target company at the time of making such public announcement of an open offer as well as at the time of making the detailed public statement. A subsequent declaration of delisting for the purpose of the delisting offer proposed to be made under sub-regulation (1) shall not suffice: Provided further that if the open offer is for an indirect acquisition that is not a deemed direct acquisition under sub-regulation (2) of regulation 5, the declaration of the intent to so delist shall be made initially only in the detailed public statement. Explanation 1: The acquirer shall not, in such target company during the preceding two years from the date of the public announcement made under this regulation, be: (i) a promoter / promoter group / person(s) in control, or (ii) directly / indirectly associated with the promoter or any person(s) in control, or (iii) a person(s) holding more than twenty-five percent shares or voting rights. Explanation 2 : The acquirer shall not acquire joint control along with an existing promoter / person in control of the company. (2) The delisting offer obligations shall be fulfilled by the acquirer in the following manner: (a) the public announcement, the detailed public statement and the letter of offer shall mention the open offer price determined in accordance with regulation 8 of these regulations and the indicative price for delisting: Provided that if the open offer is for an indirect acquisition that is not a deemed direct acquisition under sub-regulation (2) of regulation 5, the open offer price and indicative price shall be notified by the acquirer at the time of making the detailed public statement and in the letter of offer: Provided further that 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 determined that can also be revised upwards by the acquirer before the start of the tendering period which shall be duly disclosed to the shareholders. Explanation : Indicative price shall be in accordance with clause (o) of sub-regulation (1) of regulation 2 of the Delisting Regulations and shall not be less than the book value of the company as computed in accordance with the Explanation to sub-regulation (5) of regulation 22 of the Delisting Regulations. (b) in case the response to the offer leads to the delisting threshold as provided under regulation 21 of the Delisting Regulations : (i) being met, all shareholders who tender their shares shall be paid the indicative price; (ii) not being met, all shareholders who tender their shares shall be paid the open offer price. (3) Where a delisting offer made under sub-regulation (1) is not successful: (a) on account of the non receipt of the prior approval of shareholders in terms of regulation 11 of the Delisting Regulations; or (b) on account of non-receipt of the prior in-principle approval of the relevant stock exchange in terms of regulation 12 of the Delisting Regulations; or (c) the threshold as specified under Regulation 21 of the Delisting Regulations is not achieved; the acquirer shall, within two working days in respect of such failure, make an announcement in all the newspapers in which the detailed public statement was made and comply with all the applicable provisions of these regulations in relation to completing of the open offer. (4) Where a competing offer is made in terms of sub-regulation (1) of regulation 20 of these regulations: (a) the acquirer shall not be entitled to delist the target company; (b) the acquirer shall not be liable to pay interest to the shareholders on account of delay due to the competing offer; and (c) the acquirer shall comply with all the applicable provisions of these regulations and make an announcement in this regard, within two working days from the date of public announcement made in terms of sub-regulation (1) of regulation 20, in all the newspapers where the detailed public statement was made. (5) The shareholders who have tendered shares in acceptance of the offer made under sub-regulation (1), shall be entitled to withdraw such shares tendered, within five working days from the date of the announcement under sub-regulation (3). (6) Where the target company fails to get delisted pursuant to a delisting offer under sub-regulation (1), but which results in the shareholding of the acquirer exceeding the maximum permissible nonpublic shareholding threshold: (a) the acquirer may undertake a further attempt to delist the target company in accordance with the Delisting Regulations during the period of twelve months from the date of completion of the open offer, subject to the acquirer continuing to exceed the maximum permissible nonpublic shareholding in the target company. (b) such further delisting attempt shall be successful subject to the following conditions: (i) the delisting threshold as provided under regulation 21 of the Delisting Regulations is met; and (ii) fifty percent of the residual public shareholding is acquired. (c) upon failure of the further delisting attempt, the acquirer shall ensure compliance of the minimum public shareholding requirement of the target company under the Securities Contract (Regulation) Rules, 1957 within a period of twelve months from the end of the period referred to at clause (a). (d) the floor price for a further delisting attempt as referred to at clause (a) shall be higher of the following: (i) the indicative price offered under the first delisting attempt; (ii) the floor price determined under the Delisting Regulations as on the relevant date of the subsequent attempt; and (iii) the book value of the company as computed based on the method stated in explanation to clause (a) under sub-regulation 2. (7) While undertaking delisting for the first or subsequent attempt, all the provisions of the Delisting Regulations shall mutatis-mutandis be applicable, save as otherwise provided in this regulation. ] ******* 1 Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2015, w.e.f. 24-03-2015. 2 Inserted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2018 , w.e.f. 11-09-2018. 3 Substituted by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2018 , w.e.f. 11-09-2018. Prior to this, the sub-regulation read as: (3) In the event of the failure of the delisting offer made under sub-regulation (1), the acquirer, through the manager to the open offer, shall within five working days from the date of the announcement under sub-regulation (2), file with the Board, a draft of the letter of offer as specified in sub-regulation (1) of regulation 16 and shall comply with all other applicable provisions of these regulations: Provided that the offer price shall stand enhanced by an amount equal to a sum determined at the rate of ten per cent per annum for the period between the scheduled date of payment of consideration to the shareholders and the actual date of payment of consideration to the shareholders Explanation: For the purpose of this sub-regulation, scheduled date shall be the date on which the payment of consideration ought to have been made to the shareholders in terms of the timelines in these regulations. 4. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/60 dated 06-12-2021 before it was read as 1 [Delisting offer. 5A. (1) Notwithstanding anything contained in these regulations, in the event the acquirer makes a public announcement of an open offer for acquiring shares of a target company in terms of regulations 3, 4 or 5, he may delist the company in accordance with provisions of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009: Provided that the acquirer shall have declared upfront his intention to so delist at the time of making the detailed public statement 2 [and a subsequent declaration of delisting for the purpose of the offer proposed to be made under sub regulation (1) will not suffice]. (2) Where an offer made under sub-regulation (1) is not successful,- (i) on account of non receipt of prior approval of shareholders in terms of clause (b) of sub-regulation (1) of regulation 8 of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; or (ii) in terms of regulation 17 of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; or (iii) on account of the acquirer rejecting the discovered price determined by the book building process in terms of sub-regulation (1) of regulation 16 of Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, the acquirer shall make an announcement within two working days in respect of such failure in all the newspapers in which the detailed public statement was made and shall comply with all applicable provisions of these regulations. 3 [(3) In the event of failure of the delisting offer made under sub-regulation (1), the open offer obligations shall be fulfilled by the acquirer in the following manner: (i) the acquirer, through the manager to the open offer, shall within five working days from the date of the announcement under sub-regulation (2), file with the Board, a draft of the letter of offer as specified in sub-regulation (1) of regulation 16; and (ii) shall comply with all other applicable provisions of these regulations. Provided that the offer price shall stand enhanced by an amount equal to a sum determined at the rate of ten per cent per annum for the period between the scheduled date of payment of consideration to the shareholders and the actual date of payment of consideration to the shareholders. Explanation: For the purpose of this sub-regulation, scheduled date shall be the date on which the payment of consideration ought to have been made to the shareholders in terms of the timelines in these regulations.] (4) Where a competing offer is made in terms of sub-regulation (1) of regulation 20,- (a) the acquirer shall not be entitled to delist the company; (b) the acquirer shall not be liable to pay interest to the shareholders on account of delay due to competing offer; (c) the acquirer shall comply with all the applicable provisions of these regulations and make an announcement in this regard, within two working days from the date of public announcement made in terms of sub-regulation (1) of regulation 20, in all the newspapers in which the detailed public statement was made. (5) Shareholders who have tendered shares in acceptance of the offer made under sub-regulation (1), shall be entitled to withdraw such shares tendered, within 10 working days from the date of the announcement under sub-regulation (2) . (6) Shareholders who have not tendered their shares in acceptance of the offer made under sub-regulation (1) shall be entitled to tender their shares in acceptance of the offer made under these regulations.]