In the midst of the noval coronavirus, there are enormous representations made to the Securities Board of India (SEBI) for relaxations on the procedures to be followed by listed companies at the time of takeover or buy-back of shares. SEBI through a circular vide dated May 14, 2020, issued one-time relaxation on the strict enforcement of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Code) and SEBI (Buy-back of securities) Regulations, 2018 (Buyback Regulations) pertaining to open offers and buy-back tender offers opening up to July 31, 2020. The temporary relaxations provided by SEBI are:
1. Regulation 18(2) of the Takeover Code:
Original Regulation: The letter of offer shall be dispatched to the shareholders whose names are highlighted on the registers maintained as on the identified date. Such offers shall be sent within 7 working days from the date of the receipt of the comments by SEBI. However, in case no comments are received from SEBI, then 7 working days shall start from the expiry of the stipulated period in Regulation 16(4) of the Takeover Code (i.e. 15 working days).
In case any local laws or regulations of the foreign country where shareholders reside exposes any kind of material risk to either the acquirer or the target company and such shareholders hold less than 5% of the voting rights of the target company, the acquirer may refrain from sending the letter of offer to such jurisdiction. Also, every person holding shares of the target company, irrespective of the fact whether he held shares on the identified date or has not received the letter of offer, shall be entitled to tender such shares in acceptance of the open offer.
2. Regulation 9(ii) of the Buyback Regulations:
Original Regulation: The Letter of Offer shall be sent to the security holders along with the tender form within 5 working days from the date of the communication from SEBI.
Amendment to Take Code and Buyback Regulation: As per the amended regulations, the letter of offer under Regulation 18(2) of the Takeover Code and Regulations 9(ii) of Buyback Regulations shall be sent electronically subject to the following conditions:
1. The acquirer or the target company shall publish the letter of offer and the tender form from the website of the target company, stock exchange, registrar and the manager(s) to the offer;
2. The acquirer or the target company shall reach to the shareholders through SMS, television, digital platform, etc.;
3. The acquirer or the target company after sending the letter of offer to the shareholders shall make an advertisement of such letter of offer and the tender in the same newspaper in which detailed public statement was published under Regulation 14(3) of the Takeover Code and Regulation 7(i) of the Buyback Regulations;
4. The acquirer or the target company may also publish such advertisement in the newspapers; and
5. The above-mentioned advertisements shall also be available on the website of the target company, registrar, managers to the offer, and stock exchanges.
It is pertinent to note here that the acquirer or the target company and the manager to the offer shall provide the provision of inspection of the documents electronically.