CHAPTER - I PRELIMINARY

Short title, commencement and applicability.

1. (1) These regulations may be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

(2) These regulations shall come into force on the thirtieth day from the date of their publication in the Official Gazette.

(3) These regulations shall apply to direct and indirect acquisition of shares or voting rights in, or control over target company.

Definitions.

2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions and variations shall be construed accordingly,—

1. “acquirer” means any person who, directly or indirectly, acquires or agrees to acquire whether by himself, or through, or with persons acting in concert with him, shares or voting rights in, or control over a target company;
2. “acquisition” means, directly or indirectly, acquiring or agreeing to acquire shares or voting rights in, or control over, a target company;
3. “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);
4. “Board” means the Securities and Exchange Board of India established under section 3 of the Act;
5. “control” includes the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner:
   Provided that a director or officer of a target company shall not be considered to be in control over such target company, merely by virtue of holding such position;
6. “convertible security” means a security which is convertible into or exchangeable with equity shares of the issuer at a later date, with or without the option of the holder of the security, and includes convertible debt instruments and convertible preference shares;
7. “disinvestment” means the direct or indirect sale by the Central Government or any State Government or by a government company, as the case may be, of shares or voting rights in, or control over, a target company, which is a public sector undertaking;
8. “enterprise value” means the value calculated as market capitalization of a company plus debt, minority interest and preferred shares, minus total cash and cash equivalents;
9. “financial year” means the period of twelve months commencing on the first day of the month of April;
10. “frequently traded shares” means shares of a target company, in which the traded turnover on any stock exchange during the twelve calendar months preceding the calendar month in which the public announcement is made, is at least ten per cent of the total number of shares of such class of the target company:
    Provided that where the share capital of a particular class of shares of the target company is not identical throughout such period, the weighted average number of total shares of such class of the target company shall represent the total number of shares;
11. “identified date” means the date falling on the tenth working day prior to the commencement of the tendering period, for the purposes of determining the shareholders to whom the letter of offer shall be sent;
12. “immediate relative” means any spouse of a person, and includes parent, brother, sister or child of such person or of the spouse;
13. “listing agreement” means the agreement with the stock exchange governing the conditions of listing of shares of the target company;
14. “manager to the open offer” means a merchant banker referred to in regulation 12;
15. “maximum permissible non-public shareholding” means such percentage shareholding in the target company excluding the minimum public shareholding required under the Securities Contracts (Regulation) Rules, 1957;
16. “offer period” means the period between the date of entering into an agreement, formal or informal, to acquire shares, voting rights in, or control over a target company requiring a public announcement, or the date of the public announcement, as the case may be, and the date on which the payment of consideration to shareholders who have accepted the open offer is made, or the date on which open offer is withdrawn, as the case may be;
17. “persons acting in concert” means,—
(1) persons who, with a common objective or purpose of acquisition of shares or voting rights in, or exercising control over a target company, pursuant to an agreement or understanding, formal or informal, directly or indirectly co-operate for acquisition of shares or voting rights in, or exercise of control over the target company.

(2) Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be persons acting in concert with other persons within the same category, unless the contrary is established,—

1. a company, its holding company, subsidiary company and any company under the same management or control;
2. a company, its directors, and any person entrusted with the management of the company;
3. directors of companies referred to in item (i) and (ii) of this sub-clause and associates of such directors;
4. promoters and members of the promoter group;
5. immediate relatives;
6. a mutual fund, its sponsor, trustees, trustee company, and asset management company;
7. a collective investment scheme and its collective investment management company, trustees and trustee company;
8. a venture capital fund and its sponsor, trustees, trustee company and asset management company;
9. a foreign institutional investor and its sub-accounts;
10. a merchant banker and its client, who is an acquirer;
11. a portfolio manager and its client, who is an acquirer;
12. banks, financial advisors and stock brokers of the acquirer, or of any company which is a holding company or subsidiary of the acquirer, and where the acquirer is an individual, of the immediate relative of such individual:
    Provided that this sub-clause shall not apply to a bank whose sole role is that of providing normal commercial banking services or activities in relation to an open offer under these regulations;
    
13. an investment company or fund and any person who has an interest in such investment company or fund as a shareholder or unitholder having not less than 10 per cent of the paid-up capital of the investment company or unit capital of the fund, and any other investment company or fund in which such person or his associate holds not less than 10 per cent of the paid-up capital of that investment company or unit capital of that fund:
    Provided that nothing contained in this sub-clause shall apply to holding of units of mutual funds registered with the Board;
    Explanation.— For the purposes of this clause “associate” of a person means,—
    (a) any immediate relative of such person;
    (b) trusts of which such person or his immediate relative is a trustee;
    (c) partnership firm in which such person or his immediate relative is a partner; and
    (d) members of Hindu undivided families of which such person is a coparcener;
    
18. “postal ballot” means a postal ballot as provided for under the Companies (Passing of the Resolution by Postal Ballot) Rules, 2001 made under the Companies Act, 1956 (1 of 1956);
19. “promoter” has the same meaning as in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and includes a member of the promoter group;
20. “promoter group” has the same meaning as in the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;
21. “public sector undertaking” means a target company in which, directly or indirectly, majority of shares or voting rights or control is held by the Central Government or any State Government or Governments, or partly by the Central Government and partly by one or more State Governments;
22. “shares” means shares in the equity share capital of a target company carrying voting rights, and includes any security which entitles the holder thereof to exercise voting rights;
    Explanation.— For the purpose of this clause shares will include all depository receipts carrying an entitlement to exercise voting rights in the target company;
23. “specified” means as specified by the Board;
24. “state-level financial institution” means a Financial Corporation established under section 3 or section 3A and institutions notified under section 46 of the State Financial Corporations Act, 1951 (63 of 1951), and includes a development corporation established as a company by a State Government with the object of development of industries or agricultural activities in the state;
    
25. “stock exchange” means a stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
    
26. “target company” means a company and includes a body corporate or corporation established under a Central legislation, State legislation or Provincial legislation for the time being in force, whose shares are listed on a stock exchange;