SEBI SAST

Regulations 2011
By P K Pandya & Co.
Practising Company Secretaries

SEBI SAST 1994

Quick Fix

SEBI SAST 1997

Transition

SEBI SAST 2011

Transformation

P K Pandya &

Definitions
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.
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
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
P K Pandya &

 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 such target
company:
Provided that where the total share capital of the target
company is not identical throughout such period, the weighted
average number of total shares of the target company shall
represent the total number of shares.
Immediate Relative means any spouse of a person, and
includes parent, brother, sister or child of such person or of the
spouse.
Tendering Period means the period within which shareholders
may tender their shares in acceptance of an open offer to
acquire shares made under these regulations;
P K Pandya &

 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offer is withdrawn, as the case may be.
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;

P K Pandya &

Additions to Persons Acting in Concert: Promoters and members of the promoter group.
Immediate relatives.
A collective investment scheme and its collective investment
management company, trustees and trustee company.
Associate Means: any immediate relative of such person;
trusts of which such person or his immediate relative is a
trustee;
partnership firm in which such person or his immediate relative
is a partner; and members of Hindu undivided families of
which such;
person is a coparcener;

P K Pandya &

 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.
Promoter Group has the same meaning as in the Securities
and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009.
Volume Weighted Average Market Price means the product of
the number of equity shares traded on a stock exchange and
the price of each equity share divided by the total number of
equity shares traded on the stock exchange.
Volume Weighted Average Price means the product of the
number of equity shares bought and price of each such equity
share divided by the total number of equity shares bought.

P K Pandya &

Example Volume Weighted Average Market price

Sr.No

No.ofshares
traded(A)

1
2
3
4
5
TOTAL

200
300
500
700
600
2,300

MarketPriceper Productof(A)
share(B)
and(B)
500
667
898
450
999

1,00,000
2,00,100
4,49,000
3,15,000
5,99,400
16,63,500

Volume Weighted Average Market price = Product of (A and B) /Total of A

=1663500/2300
=Rs.723.26
P K Pandya &

 Weighted Average Number Of Total Shares means the

number of shares at the beginning of a period, adjusted for

shares cancelled, bought back or issued during the aforesaid
period, multiplied by a time-weighing factor.

Example Weighted Average No. of Shares

200,000 shares of A Limited were outstanding as 1st April, 2011.
The Company issued 100,000 equity shares on 1st Oct, 2011.
Weighted Average No. of shares outstanding during the year
= {[12 x 200,000] + [100,000 x 6]} / 12 = 250,000.

P K Pandya &

Modes Of Acquisition
Direct Acquisition of Shares.
Indirect Acquisition of Shares
Direct Acquisition of Control.
Indirect Acquisition of Control.

P K Pandya &

Direct Acquisition of Shares and

Control
Initial Trigger limits have been raised from 15% to 25%
Multiple triggers at 55% & 75% have been done away
Creeping acquisition limit has been retained at 5%
Creeping acquisition can be done at the rate of 5%

every year till the holdings reach 75%

Open offer has been made mandatory when there is
change in control.
Exemption by passing a special resolution has been
done away

P K Pandya &

Following Explanations have been added:Gross acquisitions alone shall be taken into account regardless
of any intermittent fall in shareholding or voting rights whether
owing to disposal of shares held or dilution of voting rights owing
to fresh issue of shares by the target company.
Example
Mr. A holds 20% and his wife holds 10 % of Equity Share capital
of ABC Ltd as on 31st March 2010. Mr. A acquires additional 2 %
on 1st September, 2010 and another 3 % on 31st December,
2010. He sold 4 % of his shares on 31st January, 2011 in open
market. He wants to acquire another 2% on 1st March, 2011. Can
he do the same?
Yes, But he will have to make an open offer.
P K Pandya &

In the case of acquisition of shares by way of issue of new shares

by the target company or where the target company has made an
issue of new shares in any given financial year, the difference
between the pre-allotment and the post-allotment percentage
voting rights shall be regarded as the quantum of additional
acquisition .
Case 1
XYZ Ltd has 1,00,000 shares outstanding in the market. Mr. A
holds 30,000 shares. The company makes a further issue of
10,000 shares. Mr. A is allotted 5000 Shares and remaining 5000
are allotted to a FII. Calculate the % of additional acquisition by
Mr. A.
P K Pandya &

Pre Allotment Holding -30%

Post Allotment Holding - 31.81% {(35,000/110,000)*100}
Additional Acquisition - 1.81%
Case 2
Suppose in Case 2 above Mr. A acquires 3000 shares prior to
above allotment. Calculate the % of additional acquisition by Mr.
A.
Pre Allotment Holding - 33%
Post Allotment Holding - 34.54% {(38,000/110,000)*100}
Additional Acquisition - 1.54%
So total additional Acquisition during the year is 3%
{(3,000/100,000)*100} +1.54% = 4.54%
P K Pandya &

It has been further stated in Regulation 3(3) that:For the purposes of sub-regulation (1) and sub-regulation (2),
acquisition of shares by any person, such that the individual
shareholding of such person acquiring shares exceeds the
stipulated thresholds, shall also be attracting the obligation to
make an open offer for acquiring shares of the target company
irrespective of whether there is a change in the aggregate
shareholding with persons acting in concert.
Case 1
Mrs. A holds 10% and Mr. A holds 22% of Equity Share capital of
ABC Ltd as on 31st March 2010. He acquires additional 4 % from
Mrs. A. Whether he will have to make an open offer?

P K Pandya &

Mr. A will have to make a PA as his individual holding increases

beyond 25%.
Case 2
Suppose Mr. A has 18 % Shares of ABC Ltd instead of 22%. He
acquires additional 5.1 % from Mrs. A. Whether he will have to
make an open offer?
Mr. A will have to make a PA as his individual holding increases
beyond 5% creeping acquisition limit during the year.

P K Pandya &

INDIRECT ACQUISITION OF SHARES

OR CONTROL
5. (1) For the purposes of regulation 3 and regulation 4,
acquisition of shares or voting rights in, or control
over, any company or other entity, that would
enable any person and persons acting in concert
with himtoexerciseordirecttheexerciseofsuch
percentage of voting rights in, or control over, a
target company, the acquisition of which would
otherwise attract the obligation to make a public
announcement of an open offer for acquiring shares
under these regulations, shall be considered as an
indirect acquisition of shares or voting rights in, or
control over the target company
P K Pandya &

Case 1
H Ltd owns 60% of Equity Shares of T ltd. Mr. A owns 5% and Mrs. A holds
10% equity shares in T ltd. Mr. A acquires 20% stake in H Ltd. Whether he
will have to make an open offer?
No, he will not have to make an open offer. As 20% stake is a minority stake
which does not enable the holder to influence the decisions of H Ltd. It does
not enable him to exercise voting rights over T Ltd.
Case 2
Mr. A owns 5% and Mrs. A holds 10% equity shares in T ltd. Mr. A acquires
60% of Shareholding in Z Ltd which owns 12% in T Ltd. Will he be required
to make an open offer?
Yes, he will have to make an open offer. As 60% stake is a majority stake
which enables the holder to influence the decisions of Z Ltd. It enables him
to exercise voting rights of 27% over T Ltd.
P K Pandya &

5 (2) Notwithstanding anything contained in these regulations, in the

case of an indirect acquisition attracting the provisions of subregulation (1) where,
the proportionate net asset value of the target company as a
percentage of the consolidated net asset value of the entity or
business being acquired;
the proportionate sales turnover of the target company as a
percentage of the consolidated sales turnover of the entity or
business being acquired; or
the proportionate market capitalisation of the target company as
a percentage of the enterprise value for the entity or business
being acquired; is in excess of eighty per cent, on the basis of
the most recent audited annual financial statements, such
indirect acquisition shall be regarded as a direct acquisition of the
target company for all purposes of these regulations including
without limitation, the obligations relating to timing, pricing and
other compliance requirements for the open offer.
P K Pandya &

XYZ is an unlisted company. Its owns 51% in A Ltd a Listed

Company(Target). The Consolidated Turnover of XYZ Ltd is Rs.
3000 Crores and the Consolidated NAV is Rs. 1000 Crores. The
Standalone Sales turnover of A Ltd is 2500 and its standalone
NAV is 850 Crores.
Proportionate NAV of A Ltd as a percentage of the consolidated
NAV of XYZ Ltd is 85.00%(850/1000 x 100).
Proportionate Sales of A Ltd as a percentage of the consolidated
sales of XYZ Ltd is 83.33% (2500/3000 x 100).
Hence this acquisition shall be Deemed as direct acquisition of A
Ltd and hence all the requirement for direct acquisition shall be
applicable.

P K Pandya &

Voluntary Offer

The acquirer together with PAC must hold 25% or more equity shares or

voting rights.

The acquirer or PAC should not have acquired any shares by creeping
acquisition or by any mode which is exempted during the 52 weeks
preceding the PA. However he can acquire shares by way of Bonus or
Stock Split or an open offer.

The open offer shall be for minimum of 10% of outstanding shares.

Compliances to be made if a voluntary open offer is made:1. The acquirer shall not acquire any shares during the open offer
otherwise than under the open offer.
2. The acquirer cannot acquire any shares for a period of six months after
completion of open offer. However he can make another Voluntary offer
or make a competing offer during the said period.
P K Pandya &

Disclosure Requirements
Regulation281. The disclosures under this Chapter shall be of the aggregated
shareholding and voting rights of the acquirer or promoter of the
target company or every person acting in concert with him.
2. For the purposes of this Chapter, the acquisition and holding
ofanyconvertiblesecurityshallalsoberegardedasshares,
and disclosures of such acquisitions and holdings shall be made
accordingly.
3. For the purposes of this Chapter, the term encumbrance shall
include a pledge, lien or any such transaction, by whatever name
called.
4. Upon receipt of the disclosures required under this Chapter, the
stock exchange shall forthwith disseminate the information so
received.
P K Pandya &

Event Based Disclosures

Initial disclosure shall be made when aggregate shareholding

of acquirer along with PACs reaches 5%.

Once the holding crosses 5% every purchase and sale of
aggregating to 2% shall have to be disclosed.
Disclosure is to be made within 2 working days to the stock
exchange and the target company.
Creation of pledge or any other encumbrance shall be treated
as acquisition and release of such pledge or encumbrance
shall be treated as disposal and disclosures shall have to be
made accordingly.
However Scheduled Commercial Banks and PFIs are exempt
form disclosure requirements if they act as as pledgee in
connection with a pledge of shares for securing indebtedness
in the ordinary course of business.
P K Pandya &

Case1:Mr. A acquires 2% shares or voting rights of T Limited on 01/11/2011

which taken together with 4% shares or voting rights already held by him OR
in association with Mr. P, aggregates to more than 5% shares of T Limited.
Then Mr. A and Mr. P needs to disclose their aggregate shareholding and
voting rights to T Limited and BSE (where it is listed) on or before 03/11/2011
in the format Annexure A given by SEBI in Circular no.
SEBI/CFD/DCR/SAST/ 2/2011/10/20 dated 20/10/2011.
Case2: Mr. A along with Mr. P holds 6% (5% or more) shares or voting rights
of T Limited. On 01/11/2011 Mr. A acquires 2% shares or voting rights of T
Limited.
Then Mr. A shall disclose such acquisition of 2 % shares to T Limited and BSE
(where it is listed) on or before 03/11/2011 in the format AnnexureB given by
SEBI in Circular no. SEBI/CFD/DCR/SAST/ 2/2011/10/20 dated 20/10/2011.

P K Pandya &

Case 3: On 01/11/2011 Mr. X holding 10% shares in T Limited

pledges 3% of his shares (shares taken by way of encumbrance
shall be treated as an acquisition) to Mr. A already holding 6%
shares in T Limited.
Then Mr. A shall disclose such acquisition and Mr. X such
disposal (by way of encumbrance) of 3 % shares to T Limited and
BSE (where it is listed) on or before 03/11/2011 in the format
Annexure B
given
by
SEBI
in
Circular
no.
SEBI/CFD/DCR/SAST/ 2/2011/10/20 dated 20/10/2011.

P K Pandya &

Continual Disclosures
These disclosures to be made by every person which together

with PACs hold more than 25% of shares or voting rights in the
target company and also the promoters of target company.
They have to disclose their aggregate shareholding and voting
rights as of the thirty-first day of March, in the Target
Company.
Disclosure to be made within 7 working days from the end of
Financial Year to every stock Exchange where the shares of
the Company are listed and to the Company.
Case1:
As on 31/03/2011 Mr. A together with Mr. P holds shares of T
Limited which entitles them to exercise more than 25% voting
right in T Limited.
P K Pandya &

They shall disclose their aggregate shareholding and voting

rights within seven working days from 31/03/2011 to BSE and T
Limited.
Case2:
Mr. XYZ, is a Promoter of T Ltd.
He and members of promoter Group and PACs, shall disclose
their aggregate shareholding and voting rights as on 31/03/2011
to BSE and T Limited within seven working days from 31/03/2011.

P K Pandya &

Disclosure of shares encumbered by

Promoters
Every encumbrance of shares of target company by Promoters

and PACs shall have to be disclosed.

Disclosure shall be made at the time of creation, invocation or
release of encumbrance.
Disclosure to be made within 7 working days from creation,
invocation or release of encumbrance to every stock Exchange
where the shares of the Company are listed and to the
Company.

P K Pandya &

Role of Company Secretary of a Listed

Company
Identify and Categorise:o Promoter
o Promoter group
o Person in control
o Persons acting in concert
o Associates
o Immediate Relatives

Ensure that timely disclosures are made by your promoters,

members of Promoter Group and PACs.

Monitor the holdings of promoters, members of Promoter Group
and PACs and take necessary action as required.

P K Pandya &

 Ensure that timely intimation is sent to stock exchanges in

respects of transfers exempt under regulation 10.

Ensure that timely reports are filed in respect of transfers
exempt under Regulation 10 with Stock Exchanges and SEBI,
if applicable.

P K Pandya &

Role of Company Secretary of an Acquirer

Conduct due diligence on the target company.
Check if provisions of Competition Act would apply and if

applicable take action accordingly.

Consider all modes of acquisition permissible and advise the
management accordingly on the best way to execute the
transaction.
Thoroughly examine the takeover regulations and make a
checklist and timeline for compliances.
Assist the management in appointment of competent Merchant
Bankers and other intermediaries.
Ensure that requisite approvals under Sec 372 and 293 and
other applicable provisions of the Companies Act, 1956 are in
place.
P K Pandya &

 Ensure that the pricing guidelines are complied with.

Ensure that the requisite funds are kept ready and back up

funding options are also in place.

Ensure that the obligations of the acquirer as specified in the
regulations are complied with.
Since a lot of information such as pricing etc will become
available at the last moment, its is likely to be a very high
pressure exercise. Hence it is very important for the CS to
maintain his cool and ensure that none of the requirements are
missed.

P K Pandya &

Role of Company Secretary of a

Target
Ensure that the obligations of the target as specified in the

regulations are complied with.

To advise the directors not to sell, transfer, encumber, or
otherwise dispose off substantial assets of the company or its
subsidiaries or issue or allot shares during the offer period
unless a special resolution by postal ballot is passed.
Place the copy of PA and Letter of offer before the board.
To furnish the list of shareholders to the acquirer
Help the Board in sending the recommendation on open offer
Help the acquirer in verification of shares tendered in
acceptance of open offer.

P K Pandya &

Offer Size
The offer size under regulation 3 and regulation 4 shall be for at

least twenty six per cent of total shares of the target company,
as of tenth working day from the closure of the tendering period.
Obligation has been placed on the acquire to take into account
all potential increases in the number of outstanding shares
during the offer period contemplated as of the date of the public
announcement.
If there is an increase in total number of shares, after the public
announcement, which is not contemplated on the date of the
public announcement then the offer size shall be proportionately
increased.

P K Pandya &

Example:Mr. A wants to acquire 25% of equity share capital of T Ltd. He

has made a public announcement on 1st October, 2011. The
tendering period is from 1st November to 16th November, 2011. T
ltd has 100,000 equity shares outstanding as on 1st October, 2011.
The Company also has 10,000 Compulsorily Convertible
Debentures outstanding against which 5,000 equity shares will
have to be issued. They are due for conversion on 17th November,
2011 and shares will have to be issued immediately.
Mr. A will have to make an open offer. The minimum size of the
open offer shall be 26% total shares of the target company. The
26% shall be calculated on the enhanced no of shares i.e
1,05,000. Hence he will have to make an open offer for 27300
shares.
P K Pandya &

 The Size of the voluntary shall be minimum 10% and shall not

exceed such amount as would result in the post-acquisition

holding of the acquirer and PACs exceeding the maximum
permissible nonpublic shareholding.
If an competing offer is made against the Voluntary offer then
the size of Voluntary offer can be increased to such amount as
the first acquirer deems fit.
This increase in the size of offer has to be made within 15
working days from the PA of competing offer, failing to which he
cannot increase the size.
Once the size of voluntary offer is increased it will cease to be
a voluntary offer and be considered a open offer under
regulation 3(2).
the acquirer, PACs and the parties to any underlying
agreement including deemed PACs of such parties cannot
tender their shares in any open offer.
P K Pandya &

Minimum Price for Direct Acquisition

8(1)The Minimum offer price shall be the highest of following: the highest negotiated price per share of the target company for any
acquisition under the agreement attracting the obligation to make a public
announcement of an open offer;
the volume-weighted average price paid or payable for acquisitions,
whether by the acquirer or by any person acting in concert with him, during
the fifty-two weeks immediately preceding the date of the public
announcement;
the highest price paid or payable for any acquisition, whether by the
acquirer or by any person acting in concert with him, during the twenty six
weeks immediately preceding the date of the public announcement;
the volume-weighted average market price of such shares for a period of
sixty trading days immediately preceding the date of the public
announcement as traded on the stock exchange where the maximum
volume of trading in the shares of the target company are recorded during
such period, provided such shares are frequently traded;
P K Pandya &

 where

the shares are not frequently traded, the price

determined by the acquirer and the manager to the open
offer taking into account valuation parameters including,
book value, comparable trading multiples, and such other
parameters as are customary for valuation of shares of
such companies; and
the per share value computed under sub-regulation (5), if
applicable.
Example
Mr A wants to take over CBB Ltd a Listed Company. CBB Ltd has
10,00,00,000 shares outstanding. He purchased shares of CBB
Ltd on as per details presented in the table given below. Some
purchases were made on stock exchange and some of them
were made on privately form other shareholders

P K Pandya &

Dateof
PricePaidpershare
NoofShares
Acquisition
Acquired
15/03/2010
500
15,00,000
15/04/2010

550

5,00,000

15/05/2010

650

10,00,000

15/06/2010

450

25,00,000

15/07/2010

700

5,00,000

17/08/2010

750

10,00,000

12/09/2010

470

5,00,000

06/10/2010

590

5,00,000

09/11/2010

640

10,00,000

09/12/2010

900

10,00,000

Total
P K Pandya &

1,00,00,000

He enters in to an agreement with Mr. H who holds 16% shares of

CBB Ltd on 15th March, 2011 to purchase his entire shareholding at
the rate of 850 per share. The shares of CBB ltd are frequently traded.
The public announcement was made on 1 st April, 2011. Calculate the
minimum price payable in the open offer.
The Minimum open offer price shall be the Highest of following:Rs.850 agreed to be paid to Mr. H.
Rs. 900 being the highest price paid for any acquisition during the
twenty six weeks immediately preceding the date of the public
announcement. (Since 01/10/2010)
Rs. 750 being the volume-weighted average market price of such
shares for a period of sixty trading days immediately preceding the
date of the public announcement.
Rs.764 being the Volume - weighted average price paid for
acquisitions during 52 weeks preceding the date of Public
Announcement.
P K Pandya &

Dateof
Acquisition
15/04/2010
15/05/2010
15/06/2010
15/07/2010
17/08/2010
12/09/2010
06/10/2010
09/11/2010
09/12/2010
15/03/2011
Total
P K Pandya &

PricePaid NoofShares
per
Acquired(B)
share(A)
550
650
450
700
750
470
590
640
900
850

5,00,000
10,00,000
25,00,000
5,00,000
10,00,000
5,00,000
5,00,000
10,00,000
10,00,000
1,60,00,000
2,45,00,000

Product(AxB)

27,50,00,000
65,00,00,000
1,12,50,00,000
35,00,00,000
75,00,00,000
23,50,00,000
29,50,00,000
64,00,00,000
90,00,00,000
13,60,00,00,000
18,82,00,00,000

VWAP = 18,82,00,00,000/2,45,00,000 = 764

So the minimum price will be Rs. 900 per share.
The Conditions for minimum price in case of Indirect Acquisitions
are also same. However one additional criteria
has been
prescribed which is as follows: the highest price paid or payable for any acquisition, whether by
the acquirer or by any person acting in concert with him, between
the earlier of, the date on which the primary acquisition is
contracted, and the date on which the intention or the decision to
make the primary acquisition is announced in the public domain,
and the date of the public announcement of the open offer for
shares of the target company made under these regulations.
Also the cut off date is date of contract or the date on which the
intention or the decision to make the primary acquisition is
announced in the public domain instead of date of PA.
P K Pandya &

8(5) In the case of an indirect acquisition and open offers under subregulation (2) of regulation 5 where,
the proportionate net asset value of the target company as a
percentage of the consolidated net asset value of the entity or
business being acquired;
the proportionate sales turnover of the target company as a
percentage of the consolidated sales turnover of the entity or
business being acquired; or
the proportionate market capitalization of the target company as
a percentage of the enterprise value for the entity or business
being acquired; is in excess of fifteen per cent, on the basis of
the most recent audited annual financial statements, the acquirer
shall, notwithstanding anything contained in sub-regulation (2) or
sub-regulation (3), be required to compute and disclose, in the
letter of offer, the per share value of the target company taken
into account for the acquisition, along with a detailed description
of the methodology adopted for such computation.
P K Pandya &

Example.
Astra Inc is a company incorporated in USA, It has a Subsidiary in India by
the name of Astra India Limited which is listed on BSE and NSE. Vertigo
Inc. acquires 51% in Astra Inc for $6,000. The Consolidate NAV of Astra
Inc is $4,000 Crores, Consolidated Sales is $8000 croresand Market
Capitalization is $10,000 Crores. NAV of Astra India is $1,000 Crores,
Sales are $ 3000 Crores and Market Capitalization is $3,000 Crores.
Since there is an indirect acquisition of Astra India, Vertigo will have to
make a open offer in India. Since the Proportionate NAV, sales and Market
Cap of Astra India as a percentage of the consolidated NAV, sales and
Market Cap of Astra INC is 25%, 37.5% and 30% respectively the
provisions of this sub regulation are attracted. Hence Vertigo Inc is
required to compute and disclose, in the letter of offer, the per share value
ascribed to Astra India when determining the price for acquisition of Astra
Inc, along with a detailed description of the methodology adopted for such
computation.
P K Pandya &

Additional Pricing Provisions

8(6) If the acquirer or any PAC has any outstanding convertible
instruments convertible into shares of the target company at a
specific price, the price at which such instruments are to be
converted into shares, shall also be considered.
8(7) The price paid for shares of the target company shall include
control premium or as non-compete fees or any other fee.
8(8) Where the acquirer has acquired or agreed to acquire whether
by himself or through or with PACs any shares or voting rights
in the target company during the offer period, whether by
subscription or purchase, at a price higher than the offer price,
the offer price shall stand revised to the highest price paid or
payable for any such acquisition:
Providedthat no such acquisition shall be made after the third
working day prior to the commencement of the tendering period
and until the expiry of the tendering period.
P K Pandya &

8(10) Where the acquirer or persons acting in concert with him

acquires shares of the target company during the period of
twenty-six weeks after the tendering period at a price higher
than the offer price under these regulations, the acquirer and
persons acting in concert shall pay the difference between the
highest acquisition price and the offer price, to all the
shareholders whose shares were accepted in the open offer,
within sixty days from the date of such acquisition:
Providedthat this provision shall not be applicable to
acquisitions under another open offer under these regulations
or pursuant to the Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009, or open
market purchases made in the ordinary course on the stock
exchanges, not being negotiated acquisition of shares of the
target company whether by way of bulk deals, block deals or
in any other form.
P K Pandya &

8(11) Where the open offer is subject to a minimum level of acceptances,

the acquirer may, subject to the other provisions of this regulation,
indicate a lower price, which will not be less than the price determined
under this regulation, for acquiring all the acceptances despite the
acceptance falling short of the indicated minimum level of acceptance,
in the event the open offer does not receive the minimum acceptance.
8(12) In the case of any indirect acquisition, other than the indirect
acquisition referred in sub-regulation (2) of regulation 5, 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 earlier of
the date on which the primary acquisition is contracted or the date on
which the intention or the decision to make the primary acquisition is
announced in the public domain, and the date of the detailed public
statement, provided such period is more than five working days.
8(13) The offer price for partly paid up shares shall be computed as the
difference between the offer price and the amount due towards callsin-arrears including calls remaining unpaid with interest, if any,
thereon.
P K Pandya &

8(14) The offer price for equity shares carrying differential voting
rights shall be determined by the acquirer and the manager
to the open offer with full disclosure of justification for the
price so determined, being set out in the detailed public
statement and the letter of offer:
Providedthat such price shall not be lower than the amount
determined by applying the percentage rate of premium, if
any, that the offer price for the equity shares carrying full
voting rights represents to the price parameter computed
under clause (d) of sub-regulation 2, or as the case may be,
clause (e) of sub-regulation 3, to the volume-weighted
average market price of the shares carrying differential
voting rights for a period of sixty trading days computed on
the same terms as specified in the aforesaid provisions,
subject to shares carrying full voting rights and the shares
carrying differential voting rights, both being frequently
traded shares.
P K Pandya &

Example
ABC Limited has 2 classes of Equity shares namely Ordinary
Equity Shares and DVRs. The open offer price of Ordinary shares
in Rs. 130 per share. The 60 Days VWAMP of ordinary shares is
Rs. 100 per share and for DVRs Rs. 50 per share. Calculate the
minimum offer price for DVRs.
The offer price of ordinary shares is at a 30% premium to its
60day VWAMP. Hence the minimum price for DVRs will be Rs. 65.
8(16) For purposes of clause (e) of sub-regulation (2) and subregulation (4), the Board may, at the expense of the
acquirer, require valuation of the shares by an independent
merchant banker other than the manager to the open offer
or an independent chartered accountant in practice having
a minimum experience of ten years.

P K Pandya &