Sebi Takeover Code Essay

List of Abbreviations ? CLB: Company law Board ? Comp Cas: Company Cases ? Comp L J: Company Law Journal ? FAQ: Frequently Asked Questions ? Ltd: Limited ? PA: Public Announcement ? PAC: Persons Acting in Concert. ? QB: Queens Bench ? Reg: Regulation ? Rs. : Rupees ? SEBI: Security and Exchange Board of India ? Sec: Section ? Spl. : Special ? UK: United Kingdom ? v: Versus Research Methodology This is to specify that the research methodology adopted throughout the project is doctrinal. Materials have been referred to in general sense.The sources for the project consist of on are Articles, Books, Internet Sources, and Magazines. My experience and my observations in this aspect are an integral part of this project.

Introduction and Scope of Project Takeover is a well accepted corporate strategy for growth and expansion. It has been a very appealing instrument, as the only need for a takeover is to be financially sound. Further it is also a lucrative instrument to persons other than a company, which wants to make it big.

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They have now become a part and parcel of modern corporate scenario. There exists an ever innovating world of takeovers which consists of acquisition, takeovers and defences to such takeovers. In this project, the researcher has tried to provide an overview the takeover law, with specific reference to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The project starts with distinction between mergers and acquisitions.Then it moves on to discuss basic concepts of takeovers and acquisitions, like history, kinds, consideration, etc. after that it discusses the United Kingdom’s position with respect to Takeovers. Then, the Indian Scenario is discussed.

Here, the specific importance is given to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 with just a brief mention of other laws as and when required. Then, the broadly accepted defences to hostile takeovers are discussed.And finally the project ends with conclusion.

Distinction between Mergers (amalgamation) and Acquisitions (takeovers) Mergers and acquisitions have been effectively used by corporates as strategic methods of expansion as well as consolidation. But there is distinction in basic nature of two which needs to be discussed at outset. Merger is necessarily concerned with loss of existence of either one or more of the companies and merging it into a single existing company, or all the companies loose their existence and form an entirely new company.On the other hand, acquisition is concerned with buying of shares, voting rights or control of the target company in any other manner. When such acquisition is with the intention of taking over the control of the target company, it is loosely called takeover. Thus as distinguished from merger, there is no loss of existence of the target company in acquisition. Both remain a separate legal entity. The only change which is effected is in the control of the target company.

The History of Mergers and Acquisition[1]The corporate historians classify the phases of mergers and acquisition in 5 phases: ? 1st Merger & Acquisition Wave – 1897-1904 – ”Merging and acquiring for Monopoly” Underlying factors: Technological developments, Innovations in production process, Rapid Economic Expansion, Corporation laws relaxed, Voluntary code of ethical behaviour, Characteristics of 1st wave mergers: Horizontal mergers, Heavy manufacturing industry, Reasons for ending 1st wave: Majority of mergers failed – didn’t achieve increase in efficiency, Economic recession in 1903, Stock market rash in 1904 ? 2nd Merger & Acquisition Wave – 1916-1929 – ”Merging and acquiring for Oligopoly” Underlying Factors: Post-World War I economic boom, Technological developments, Characteristics of 2nd wave mergers and acquisitions: Produced fewer monopolies, rather oligopolies, vertical mergers, and conglomerates (usually related), Used significant proportion of debt to finance deals, Investment banks played central role in financing (as in 1st wave) Reasons for ending 2nd wave:October 29, 1929 stock market crash, Great depression ? rd Merger & Acquisition Wave – 1965-1969 – ”Conglomerate Mergers” Underlying Factors: Booming economy, Rising stock prices, High interest rates, Financial manipulations, Price-earnings game, Pooling of interests method of accounting Characteristics of 3rd wave: Primarily conglomerate mergers, Some bidders smaller than targets, Primarily equity-financed – investment banks did not play central role, CEOs with vision to create conglomerates Reasons for ending 3rd wave: Market eventually saw through financial manipulations, Many of conglomerates performed poorly ? th Merger & Acquisition Wave – 1981-1992 – ”The Megamerger” Underlying Factors: Expanding economy, Technological developments International competition, Deregulation, Financial innovations, Investment banking industry much more competitive, Failure of conglomerates Characteristics of 4th wave: Size and prominence of acquisition targets much greater than before, Oil and gas industries dominant in early 1980s, while pharmaceuticals most common in late 1980s; airlines and banking also common, Foreign takeovers became common, Heavy use of debt to pay for acquisitions, Junk bonds, More hostile takeovers, Corporate raiders & Arbitrageurs, Investment banks and law firms active Reasons for ending 4th wave: Initiation of policy of industrialisation. ? 5th Merger & Acquisition Wave – 1992-till date – ”Strategic restructuring” Underlying Factors: Expanding economy, rising stock prices, Technological developments, Globalization, Deregulation Characteristics of 5th wave: Emphasized longer-term strategy rather than immediate financial gains, More often financed with equity than debt, Consolidation in the telecommunications and banking industries, Legislation. [pic] 1. Legal Context[2]Friendly or Negotiated Takeover: Friendly takeover means takeover of one company by change in its management & control through negotiations between the existing promoters and prospective invester in a friendly manner. Thus it is also called Negotiated Takeover. This kind of takeover is resorted to further some common objectives of both the parties. Generally, friendly takeover takes place as per the provisions of Section 395 of the Companies Act, 1956. Bail Out Takeover: Takeover of a financially sick company by a financially rich company as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 to bail out the former from losses.

Hostile takeover: Hostile takeover is a takeover where one company unilaterally pursues the acquisition of shares of another company without being into the knowledge of that other company.The most dominant purpose which has forced most of the companies to resort to this kind of takeover is increase in market share. The hostile takeover takes place as per the provisions of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

2. Business Context Horizontal Takeover: Takeover of one company by another company in the same industry. The main purpose behind this kind of takeover is achieving the economies of scale or increasing the market share. E. g. takeover of Hutch by Vodafone. Vertical takeover: Takeover by one company with its suppliers or customers.

The former is known as Backward integration and latter is known as Forward integration. E. g. takeover of Sona Steerings Ltd. By Maruti Udyog Ltd.

s backward takeover. The main purpose behind this kind of takeover is reduction in costs. Conglomerate takeover: Takeover of one company by another company operating in totally different industries. The main purpose of this kind of takeover is diversification. Objectives of a Takeover[3] The objects of a takeover may inter alia be: ? To effect savings in overheads and other working expenses on the strength of combined resources; ? To achieve product development through acquiring firms with compatible products and technological/manufacturing competence, which can be sold to the acquirer’s existing marketing areas, dealers and end users; ?To diversify through acquiring companies with new product lines as well as new market areas, as one of the entry strategies to reduce some of the risks inherent in stepping out of the acquirer’s historical core competence; ? To improve productivity and profitability by joint efforts of technical and other personnel on the strength of improved efficiency in administration, management, production, finance and marketing of goods and services as a consequence of unified control; ? To create shareholder value and wealth by optimum utilization of the resources of both companies; ? To eliminate competition; ? To keep hostile takeover at bay; ? To achieve economy of numbers by mass production at economical costs; ?To secure advantage of vertical combination by having under one command and under one roof, all the stages or processes in the manufacture of the end product, which had earlier been available in two companies at different locations, thereby saving loading, unloading, transportation costs and other expenses and also by affecting saving of time and energy unnecessarily spent on excise formalities at different places and stages; To secure substantial facilities as available to a large company compared to smaller companies for raising additional capital, increasing market potential, expanding consumer base, buying raw materials at economical rates and for having own combined and improved research and development activities for continuous development of the products so as to ensure a permanent market share in the industry; ? To increase market share; ? To achieve market development by acquiring one or more companies in new geographical territories or segments, such as new user groups or price categories, in which the activities of acquirer are absent or do not have a strong presence. Consideration for Takeover[4]Selection of the method for takeover should be made on the basis of information received about the target company and the means available with the acquirer. 1.

Consideration in the form of cash: Takeover by an acquirer company of a target company may be affected by a cash consideration, either for all or in part of the equity capital through a bid directly from the equity holders or through the stock market. The offerer company can have the new shares in sufficient number allotted to it or its directors to gain controlling voting power in the offeree company and also purchase for cash, block of shares from the persons in control of the offeree company, carrying effective voting rights and thereby enabling its nominees on the Board to control the affairs of the company. 2.Consideration in the form of Shares: When consideration is offered in the form of shares by the offerer in own company to shareholders of the target company various courses of action are available: a. Share-for-share takeover bid in which the offerer company in exchange for shares of offeree provides fully paid up shares on a stated basis. Apart from this, share-plus-cash or share-plus-loan stock, convertible or non-convertible, shares or loan stock with a cash option could be a mode of consideration. b.

Reverse bid wherein the offeree company makes share-for-share bid for the whole of the equity capital of the offerer company where the offerer company has a large capital base.This alternative is more suitable when the offeree company is listed, a growing concern and capable of acting as a better holding company by pursuing its policies etc. Also, this mode offers sufficient tax advantages.

c. Combinations of various modes may be resorted to, for discharging the consideration. For instance, acquisition by private deal of a block of shares from the existing Board of Directors or larger controlling interest shareholders of the offeree company or acquisition of all or part of the assets of the offeree company for shares of offerer company or reverse acquisition with offeree company etc.

Takeovers in United Kingdom[5] In UK, there exists no specific legislation governing and regulating takeover.However, as a part of the process of regulation of Public Limited Companies on the London Stock Exchange, takeover bids for public companies must comply with City Code of Takeovers and Mergers[6], which is issued, administered and enforced by the Panel on Takeovers and Mergers. Though not being legislation, the code has been accepted and recognized clearly by the courts in England.

[7] This code functions on the basis of 6 general principles, which are: 1. All holders of the securities of an offeree company of the same class must be afforded equivalent treatment; moreover, if a person acquires control of a company, the other holders of securities must be protected. 2.

The holders of the securities of an offeree company must have sufficient time and information to enable them to reach a properly informed decision on the bid; where it advises the holders of securities, the board of the offeree company must give its views on the effects of implementation of the bid on employment, conditions of employment and the locations of the company’s places of business. 3. The board of an offeree company must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the bid. 4. False markets must not be created in the securities of the offeree company, of the offeror company or of any other company concerned by the bid in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted.

5.An offeror must announce a bid only after ensuring that he/she can fulfil in full any cash consideration, if such is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration. 6.

An offeree company must not be hindered in the conduct of its affairs for longer than is reasonable by a bid for its securities. The entire code lays down rules and regulation regarding how to apply these principles in case of takeovers. Takeover in Indian Scenario History[8] In India it was only in 20th century that the concept of takeover took birth but even then the concept of hostile takeovers was not known to anybody. This concept emerged when Swaraj Paul started efforts to takeover Escorts Ltd. and DCM Ltd. He was the first hostile raider among the raiders of Indian stock market.Although Paul could not succeed in his efforts because the incumbents fend him off by using the technicalities of rules governing non-residents but this created a need for a takeover code.

This need was further accentuated in 1990s when the government initiated the policy of liberalization and globalization which resulted in growth of Indian economy at an increased pace, and it created a highly competitive business environment, which motivated many companies to restructure their corporate strategies by including the tools of mergers and takeovers. The first attempts at regulating takeover was made in a limited way through Section 108A to 108I of the Companies Act, 1956.Also it was sought to be regulated under Clause 40 of the Listing Agreement, which provided for minimum limit of 25% to make a Public offer. SEBI was established in 1992 as a body corporate under the SEBI Act, 1992 with the main objectives to- i) protect the interest of investors in securities market, and ii) to provide for the orderly development of securities market. In pursuance of these objectives, it was given a function of regulating Substantial Acquissition of Shares and Takeovers under Section 11(2)(h) and was given a power to impose penalty on wrong doer under Section 15H which was Rs. 25 lakhs or three times the profit, whichever is higher.Yet need being felt for a comprehensive code regulating Takeovers.

In the light of then present circumstances, the need for some law to regulate takeover was strongly felt. Moreover to achieve its objectives as stated in SEBI Act, 1992, SEBI enacted SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1994 in exercise of powers conferred under section 30 of the Act which laid down a procedure to be followed by an acquirer for acquiring majority shares or controlling in another company, so that process of takeover is carried out in a fair and transparent manner. Thereafter, these regulations have been amended a number of times to address the changing circumstances and needs of corporate sector.After gaining considerable experience in the said matters, In 1997 SEBI Takeover Code has been rechristened by enacting SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 substituting SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1994. In its present forms, it has been subject to few amendments and efforts are being made to make it as comprehensive as possible. The Takeover Code Necessity of Takeover Code[9] The twentieth century began with the process of transformation of entire business scenario. The economy of India which was controlled and regulated by the Government was set free to seize new opportunities available in the world.

With the announcement of the policy of globalization, the doors of Indian economy were opened for the overseas investors.But to compete at the world platform, the scale of business was needed to be increased. In this changed scenario, mergers and acquisitions were the best option available for the corporates considering the time factor involved in capturing the opportunities made available by the globalization. This new weapon in the armory of corporates though proved to be beneficial but soon the predators with huge disposable wealth started exploiting this opportunity to the prejudice of retail investor. This created a need for some regulation to protect the interest of investors so that the process of takeover and mergers is used to develop the securities market and not to sabotage it.In the year 1992, with the enactment of SEBI Act, SEBI was established as regulatory body to promote the development of securities market and protect the interest of investors in securities market.

Further it got the power to make regulations for the above objectives Committee recommendation[10] There was an existing takeover code of 1995, but it was found to be inadequate for changing circumstances of corporate scenario. Therefore, government setup a committee under the chairmanship of Hon’ble Justice P. N. Bhagwati to examine the areas of deficiency in the existing code and the necessity of new code. This committee submitted its report in 1997. In its report, the committee stated the necessity of a Takeover Code on the following grounds: ?The confidence of retail investors in the capital market is a crucial factor for its development. Therefore, their interest needs to be protected.

? An exit opportunity shall be given to the investors if they do not want to continue with the new management. ? Full and truthful disclosure shall be made of all material information relating to the open offer so as to take an informed decision. ? The acquirer shall ensure the sufficiency of financial resources for the payment of acquisition price to the investors. ? The process of acquisition and mergers shall be completed in a time bound manner.

? Disclosures shall be made of all material transactions at earliest opportunity. The breakthroughConsidering these recommendation of Bhagwati committee, a new Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Code or the Code) were passed with effect on 20/02/1997. Framework of the 1997 Takeover Code The basic objective behind the formation of takeover code is to bring more transparency in the takeover and acquisition process of the Public Companies and the protection of investors in case of such takeovers and acquisition. The code stands on three pillars: 1. Disclosure of shareholding when threshold limit is crossed 2. mandatory public offer in case of substantial acquisition 3. andatory public offer in case of takeover of control of the target company, irrespective of the fact that whether shares are acquired or not.

Scope of application of the code The SEBI takeover code is only applicable in case the target company is an Indian company Listed in recognized Indian Stock Exchanges, irrespective of the fact that acquirer is or is not an Indian listed company. Therefore, by inference takeover of an unlisted company is not governed by the takeover code. Further, cases involving takeover of a foreign company by an Indian acquirer is also not governed by the code.

However, takeover of an Indian listed company by a foreign acquirer comes within the scope of the code as the definition of person who can be an acquirer is very wide. Basic concepts[11]Takeovers & Substantial acquisition of shares The regulations do not expressly deal with takeovers, nor does it define it anywhere in the regulation. The regulation only deals with acquisition and substantial acquisition of shares and voting rights. When an “acquirer” takes over the control[12] of the “target company”, it is termed as takeover. When an acquirer acquires “substantial quantity of shares or voting rights” of the Target Company, it results into substantial acquisition of shares.

The term “Substantial” which is used in this context has been clarified subsequently. The Takeover Code recognizes both voting rights as well as control irrespective of acquisition of shares.This regulation deals with acquisition of control, irrespective of whether or not there has been any acquisition of shares or voting rights. The regulation states that if any acquirer including person acting in concert acquires control over the target company irrespective of any acquisition of shares or not he has to give public announcement to acquire shares from shareholders of the company.

However, the requirement of public offer is not there if the shareholders of the company approve change in control by a special resolution. Furthermore the code provides the facility of voting through postal ballot shall be provided to the shareholders for passing of the special resolution.It is appreciable that the acquisition of control also includes both direct & indirect acquisition of control over target company by virtue of acquisitions of companies whether listed or unlisted and whether in India or abroad. Further, the control must be taken to mean both de facto control also and de jure control for the purpose of determining control in Regulation 12[13]. Target Company[14] A Target Company is a company whose shares are listed on any stock exchange and whose shares or voting rights are acquired/being acquired or whose control is taken over/being taken over by an acquirer.

Acquirer[15] An acquirer means any individual/company/any other legal entity which intends to acquire or acquires substantial quantity of shares or voting rights of target company or acquires or agrees to acquire control over the target company.It includes persons acting in concert (PAC) with the acquirer. The term acquirer can be divided into following: a. Any person: The term person includes both individuals & juristic persons like company, partnership firm etc, who either directly or indirectly acquire shares, voting rights or control over the target company.

An promoter, who is already holding certain shares in the company is also called an acquirer if he goes on for further acquisition, if such an acquisition does not qualify to be an inter se transfer within Reg. 3(1)(e) of the code. [16] b. Who directly or indirectly: The acquisition extends to both direct & indirect acquisition.The code itself provides an example of indirect acquisition is explained as in regulation 3(k), which states that acquisition of shares of an unlisted holding or investment company, which in turn holds majority stake in listed company.

The other instance can be acquisition of voting rights in a listed company from the present promoters through power of attorneys or by entering into voting rights arrangement. c. Acquires or agrees to acquire: The acquisition includes both completed acquisition as well as agreement to acquire. The moment the acquirer sets into motion the process of acquiring shares or control, acquisition within the meaning regulation takes place.

Also, it was held that acquirer includes both who has acquired shares as well as who agrees acquire shares or voting rights in a company. 17] Similarly if the word ‘acquirer’ were to mean only those who have already acquired shares, then the provisions regarding ‘public announcement’ in the SEBI Regulations would be rendered nugatory. The salutary protections contemplated through public announcement would be lost. d.

Shares, voting rights or control over target company e. Either by himself or with any person acting in concert with the acquirer: The acquisition can be on the behalf of acquirer himself or it may be with the persons acting in concert which are further defined under regulation 2(e) of the Code. The acquirer can take the shares on its own or along with the persons who share the common objective of acquisition of share or voting rights or control over the target company. Persons Acting in Concert (PACs)[18]PACs are individual(s)/company(ies)/ any other legal entity(ies) who are acting together for a common objective or for a purpose of substantial acquisition of shares or voting rights or gaining control over the target company pursuant to an agreement or understanding whether formal or informal. Acting in concert would imply co-operation, co-ordination for acquisition of voting rights or control, either direct or indirect. The concept of PAC assumes significance in the context of substantial acquisition of shares since it is possible for an acquirer to acquire shares or voting rights in a company “in concert” with any other person in such a manner that the acquisition made by them may remain individually below the threshold limit but collectively may exceed the threshold limit.Unless the contrary is established certain entities are deemed to be persons acting in concert like companies with its holding company or subsidiary company, mutual funds with its sponsor / trustee / asset management company, etc.

There are certain important aspects of PAC: ? Commonality of objective: The persons who are acting in concert on the basis of commonality of objective of acquisition of shares or voting rights or gaining control over the target company. The commonality can be achieved pursuant to any agreement or any understanding entered by such person. The agreement or understanding can be formal or may be informal. Further, the term common objective has been restricted by the subsequent words in the sense that the common objective shall be the substantial acquisition of shares or voting rights or gaining control over the target Company.Therefore, it becomes clear that the two persons must share a common intention of substantial acquisition of shares or voting rights to be treated as persons acting in concert. [19] ? Business Relations: Further, the code identifies persons who virtue of their business relations is presumed to be person acting in concert. The responsibility has been cast on these persons to show that the fact is otherwise in given situation.

The second part of the definition lists out certain instances where two persons will be deemed to be persons acting in concert. However, Mere common management and having common directors alone cannot lead to the conclusion that the acquirers have been acting in concert. There has to be a sufficient nexus.

[20] PAC VS. Deemed PAC[21]The term ‘Person Acting in Concert’ has been defined in two parts. In the first part, the term has been defined in the general terms whereas in the second part certain instances have been specifically listed out where the two persons will be deemed as PAC, unless contrary is established. These are called deemed PAC.

However it is of utmost importance to mention here that second part starts with the words “without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established”. It means that the first part will prevail over the second part.Therefore, at the first instance, the persons mentioned thereafter will be deemed to be person acting in concert as suggested by the words “unless the contrary is established”. However, notwithstanding the fact that two persons fall in one or other category of second part of the definition, it has nevertheless to be established that they share common objective. This intention of the law-makers has been made clear by the starting words of second part i. e. “without prejudice to the generality of this definition”.

Therefore, if the two persons does not share common objective of substantial acquisition of shares or voting rights or acquisition of control, they will not be treated as persons acting in concert even if they fall in one or the other category of the second part of the definition.Therefore, the main difference between the persons not falling in the second part of the definition and person falling in the second part of the definition is that in the former case it is to be positively established that two persons share common objective whereas in the letter case this presumption is already there and it has to be rebutted that the two persons does not share common objective. Substantial acquisition The said Regulations have discussed this aspect of ‘substantial quantity of shares or voting rights’ separately for two different purposes: (I) For the purpose of disclosures to be made by acquirer(s): (1) 5% or more shares or voting rights:[22]A person who, along with ‘persons acting in concert’ (“PAC”), if any, acquires shares or voting rights (which when taken together with his existing holding) would entitle him to more than 5% or 10% or 14% shares or voting rights of target company, is required to disclose the aggregate of his shareholding or voting rights to the target company and the Stock Exchanges where the shares of the target company are traded within 2 days of receipt of intimation of allotment of shares or acquisition of shares. 2) More than 15% shares or voting rights:[23] An acquirer who holds more than 15% shares or voting rights of the target company, shall within 21 days from the financial year ending March 31 make yearly disclosures to the company in respect of his holdings as on the mentioned date.The target company is, in turn, required to pass on such information to all stock exchanges where the shares of target company are listed, within 30 days from the financial year ending March 31 as well as the record date fixed for the purpose of dividend declaration. It should be noted that non disclosure, by total disregard of the takeover code is not a mer technical lapse, but a substantial violation of the provision and hence can be taken as non compliance with the code. [24] Further a subsequent disclosure due to some other obligation shall not preclude the nondisclosure at earlier stage.

[25] (II) For the purpose of making an open offer by the acquirer (1) 15% shares or voting rights:[26]An acquirer who intends to acquire shares which along with his existing shareholding would entitle him to more than 15% voting rights, can acquire such additional shares only after making a public announcement (“PA”) to acquire at least additional 20% of the voting capital of the target company from the shareholders through an open offer. (2) Creeping limit of 5%:[27] An acquirer who is having 15% or more but less than 75% of shares or voting rights of a target company, can consolidate his holding up to 5% of the voting rights in any financial year ending 31st March. However, any additional acquisition over and above 5% can be made only after making a public announcement. However in pursuance of Reg. (1A) any purchase or sale aggregating to 2% or more of the share capital of the target company are to be disclosed to the Target Company and the Stock Exchange where the shares of the Target company are listed within 2 days of such purchase or sale along with the aggregate shareholding after such acquisition /sale.

An acquirer who has made a public offer and seeks to acquire further shares under Reg. 11(1) shall not acquire such shares during the period of 6 months from the date of closure of the public offer at a price higher than the offer price. (3) Consolidation of holding:[28] An acquirer who is having 75% shares or voting rights of target company, can acquire further shares or voting rights only after making a public announcement specifying the number of shares to be acquired through open offer from the shareholders of a target company.

Modes of Takeover There are two modes of takeover: 1. Takeover Bid; 2. Tender Offer Takeover Bid Takeover bid” is an offer to the shareholders of a company, whose shares are not closely held, to buy their shares in the company at the offered price within the stipulated period of time. It is addressed to the shareholders with a view to acquiring sufficient number of shares to give to the acquirer company, voting control of the target company.

It is usually expressed to be conditional upon a specified percentage of shares being the subject-matter of acceptance by or before a stipulated date. A takeover bid is a technique, which is adopted by a company for taking over control of the management and affairs of another company by acquiring its controlling shares. A.Mandatory Bid[29]: SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 as amended by Second Amendment Regulations, contain provisions for making public announcement i. e. mandatory bid in the following cases: a. For acquisition of 15% or more of the shares or voting rights; b.

For acquiring additional shares or voting rights to the extent of 5% of the voting rights in any financial year ending on 31st March if such person already hold not less than 15% but not more than 75% of the shares or voting rights in a company; c. For acquiring shares or voting rights along with persons acting in concert to exercise more than 75% of voting rights in a company. d. For acquiring control over a company.

B.Partial Bid[30]: Partial bid covers a bid made for acquiring part of the shares of a class of capital where the offerer intends to obtain effective control of the offeree through voting power. Such a bid is made for equity shares carrying voting rights.

In other words the offerer bids for the whole of issued shares of one class of capital in a company other than equity share capital carrying voting rights, partial bids come to the fore. Regulation 12 of SEBI (Substantial Acquisition of Shares) Regulations, 1997 qualifies partial bid in the form of acquiring control over the target company irrespective of whether or not there has been any acquisition of shares or voting rights in a company. For such acquisition, it is necessary to make public announcement in accordance with the Regulations. C.Competitive Bid[31]: Competitive bid can be made by any person within 21 days of public announcement of the offer made by the acquirer. Such bid shall be made through public announcement in pursuance of Regulation 25 of the SEBI Takeover Regulations 1997. Any competitive offer by an acquirer shall be for such number of shares which when taken together with shares held by him along with persons acting in concert with him shall be atleast equal to the holding of the first bidder including the number of shares for which the present offer by the first bidder has been made. No person shall make a competitive bid for acquisition of shares of a financially weak ompany where once lead financial institution has evaluated the bid and accepted the bid of the acquirer who has made the public announcement in pursuance of Regulation 35 of Takeover Code.

Tender offer[32] The acquirer pursues takeover without consent of the Target Company by making a tender offer directly to the shareholders of the Target Company to sell (Tender) their shares, this offer is generally made in cash. This method is followed when the acquirer intends to resort to Hostile Takeover for the purpose of taking over control of the Target Company. Takeover of Tata Tea of Consolidated Coffee Ltd. (CCL) is an example of tender offer where more than 50% of the CCL’s shareholders were ready to sell there shares to Tata Tea as the price offered was much more than investment.

After enforcement of 1997 Takeover Code, public announcement is necessary as mandatory bid for tender offer to acquire shares or control of the target company if such tender offer is more than the limits of shareholding. Inter-se Transfer amongst Promoters` There a certain exceptions provided under Reg. 3 of the Takeover code, to which the provisions under Reg. 10, 11 and 12 do not apply. Out of the various exceptions, most interesting and most controversial exception has been the inter-se transfer among the promoters of the company[33]. Inter se transfer of shares consists of transfer amongst: (a) Qualifying Indian promoters and foreign collaborators who are shareholders (b) Qualifying PromotersAcquisition of shares through inter se transfer amongst qualifying promoters is not subject to open offer if it complies with certain formalities. The inter se transfer should be between & amongst the qualifying promoters. The transferor(s) as well as the transferee(s) have been holding shares in the target company for a period of at least three years prior to the proposed acquisition.

It would be sufficient that parties to the transactions are holding shares as shareholders and not as promoters. The benefit of exemption will be available subject to such transferor(s) and transferee(s) having complied with regulation 6, regulation 7 and regulation 8.In case the proposed transaction exceeds 5% of the voting share capital of the company, the acquirers have to, for the intimation of public, notify the details of the proposed transaction at least 4 working days in advance of the date of the proposed transaction to the stock exchanges where the shares of the Company are listed. [34] The acquirer is further required to file a report within 21 days of the date of acquisition to the Securities & Exchange Board of India (SEBI) giving all details in respect of acquisitions. Further the compliance under regulation 3(4) is not a one-time compliance. The acquirer has to file a report within 21 days of the date of acquisition every time he claims exemption under this regulation.

[35] The acquirer has to along with the report under regulation 3(4) deposit fees of Rs 25,000/- to the Board either by a Banker cheque or demand draft in favour of Securities & Exchange Board of India. 36] In case of warrants or any other security convertible into equity shares at a later date, Regulation 3(3), 3(4) & 3(5) has to be complied with reference to the date of actual conversion into shares. In other words, the acquirer has to at least 4 working days in advance of the date of conversion of warrants/ any other security convertible into equity shares, notify the details to the stock exchanges as required under regulation 3(3).

The acquirer and seller have to comply with Regulation 6, 7 & 8, as the regulation does not relieve the acquirer from complying with disclosure requirements. The additional condition for the purpose of inter se transfer between promoters is that the price for executing transaction is not exceeding 25% of the price determined under Regulation 20(4) & (5).The exemption will not be available if the price at which the inter –se transfer has been executed, is greater than 25% of the price as determined u/r regulation 20 i.

e. for frequently and infrequently traded shares. Takeover Panel[37] SEBI is authorized to constitute a panel of majority of independent persons from within the categories mentioned in Section 4(5) of the SEBI Act. This panel is empowered to recommend exemptions to certain acquisition from compliance requirement of Regulation 3(1)(1). The procedure in this regard is that any acquirer seeking exemption under regulation 3(1)(1) shall file an application to the SEBI verified by an affidavit giving full details of the acquisition and the grounds on which the exemption is sought.The SEBI shall within 10 days of the receipt of the application forward to the panel for its recommendation. The panel shall make recommendation within 15 days on receipt of the application.

The SEBI shall, after giving reasonable opportunity to all, pass a reasoned order within 30 days which also has to be published. Public Announcement[38] In order to appreciate the implications arising here from, it is pertinent for us to consider the meaning of the term ‘public announcement’. A Public announcement is an announcement given in newspapers by the acquirer, primarily to disclose his intention to acquirer the Share capital or voting rights of the target company from the existing shareholders by means of an open offer.The acquirer is required to appoint a merchant banker registered with SEBI before making a PA and is also required to make PA within four working days of the entering into an agreement to acquire shares or deciding to acquire shares/voting rights of target company or after any such change or changes as would result in change in control over the target company.

Incase of indirect acquisition or change in control, acquirer can make public announcement within three months of consumnation of acquisition or change in control or restructuring of the parent or the Company holding shares of or control over the target Company in India. The offer should disclose inter alia[39]: ? Offer price, ? Number of shares to be acquired from public, ? Identity of the acquirer Purpose of acquisition ? Future plans, if any, and ? Other details as necessary The basic objective behind a PA is to make the shareholders of the target company aware that there is an exit opportunity available to them, and to make the target company alert in case of a hostile takeover raid. Public offer[40] The acquirer is required to submit a draft offer document[41] with SEBI within 14 days of PA through its merchant banker. Along with the offer document, the acquirer has also to submit a due diligence certificate. It is important to note that SEBI does not vet or approve the offer document. It only ensures that adequate disclosures have been made or not.

Thereafter, the acquirer, through its merchant banker, has to send the offer document, along with the blank acceptance form, within 45 days of making of PA, to all shareholders whose name appears on the register of the company on a particular date[42]. The offer remains open for 30 days. The shareholders are required to send their share certificates/related documents to the Registrar or merchant banker as specified in the offer document along with the acceptance form if they wish to avail the exit opportunity. Offer Price[43] The concept of frequently and infrequently traded shares is used in case of offer price i. e. price to be paid to the shareholders of the Target Company at the time of public offer.

The regulations have divided the shares to be acquired into two heads 1. Infrequently traded shares 2. Frequently traded shares Meaning of Infrequently Traded Shares:The infrequently traded shares are those where the annualized trading turnover of the shares of target company during the preceding six months in which the public announcement is made is less than five per cent of the listed shares (in number). It is further clarified that the weighted number of shares listed during the said six months period can be taken. However, if the shares have been listed for less than 6 months, the trading turnover is to be taken with reference to actual number of days for which the shares have been listed.

Factors for determining Price in case of infrequently traded The merchant banker and the acquirer have to take the highest of the following to determine the price to be paid to the shareholders of the Target company:- ) Negotiated price paid by the acquirer under regulation 14(1) i. e. the price paid by the acquirer to the seller under share purchase agreement or memorandum of understanding entered with the seller. b) The highest price paid by the acquirer or persons acting in concert in consideration of shares of target company acquired during 26 weeks prior to public announcement. The acquisition here can be by any mode including the preferential issue, right issue & public issue.

c) Also, the price can be determined on the basis of following:- i) Return on Net Worth ii) Book value of share of Target company iii) Earning per share iv) Price earning multiple vis –a- vis the industry average.Also, the Securities & Exchange Board of India may also require the valuation of such shares by Independent merchant banker who is not a manager to the offer or by a chartered accountant who has got the standing of minimum 10 years or from a public financial institution. However, as per current practice if no price is available, the judgment of Supreme Court in Hindustan Lever Limited is used to calculate the price of the share. The Supreme Court in the mentioned case has provided the weights to different parameters to calculate the price. Meaning of Frequently Traded Shares Those which are not infrequently traded shares are considered as frequently traded shares i. e.

here the annualized trading turnover of the shares of target company during the preceding six months in which the public announcement is made is more than five per cent of the listed shares (in number). It is further clarified that the weighted number of shares listed during the said six months period can be taken. Factors for determining price a. The highest price paid by the acquirer or persons acting in concert in consideration of shares of target company acquired during 26 weeks prior to public announcement.

The acquisition here can be by any mode including the preferential issue, right issue & public issue. b. Highest of the following a.Average of the weekly high & low of the closing price of the shares of the target company as quoted on the stock exchange where the shares of the company are most frequently traded during the preceding 26 weeks of the date of public announcement b. Average of the weekly high & low of price of shares of the target company as quoted on the stock exchange where the shares of the company are most frequently traded during the preceding 2 weeks of the date of public announcement. The highest price may be adjusted for quotations, if any on cum-rights or cum-bonus or cum dividend basis during the mentioned period of 26 weeks, if it is apprehended that such corporate actions affect the price otherwise in normal scenario.

However, in case acquirer acquires shares in the open market or through negotiations after the public announcement at a price higher than the offer price stated in letter of offer, in such case acquisition shall be at the highest price paid by the acquirer acquired through open market or through negotiations. Payment of Consideration[44] The acquirer is required to complete the payment of consideration to the shareholders who have accepted the offer within 15 days from date of closure of the offer. In case the delay in payment is on account of non-receipt of statutory approvals and if the same is not due to willful default or neglect on part of the acquirer, the acquirer would be liable to pay interest to the shareholders for the delayed period in accordance of the regulations. Acquirer is however not to be made accountable for the postal delays.If the delay is not due to above reasons, it would be treated as violation of regulation.

Safeguards for Payment Before making the PA, the acquirer has to create an escrow account having 25% of the total consideration payable under the offer of size Rs. 100 crore (Additional 10% if the offer size is more than Rs. 100 crore)[45], which can be in form of a cash deposit with scheduled commerce bank, bank guarantee in favour of the merchant banker or deposit of acceptable securities with appropriate margin with the merchant banker. The merchant banker is also required to confirm that financial arrangements are in place for fulfilling the obligation. 46] In case if acquirer fails to make payment, the merchant banker has an obligation to forfeit the escrow account and distribute the proceeds in the following way: ? 1/3rd of amount to target company ? 1/3rd to regional stock exchange, for credit to investor protection fund, etc ? 1/3rd to be distributed on pro rata basis among the shareholders who have accepted the offer. [47] Penal Provisions In the event of non-compliance of the provisions of the takeover code, commonly known as Takeover Code, the acquirer is liable for the penal provisions contained in the code itself. [48] As per regulation 45 of the Regulations, for failure to carry out obligations under the regulations, following consequences may follow: 1.The acquirer faces the consequences of the escrow amount being forfeited besides penalties.

2. The Board of Target Company shall be liable for action in terms of regulation and Act. 3. The intermediary would face suspension or cancellation of registration. The penalties stated above may include: i.

Criminal prosecution under section 24 of the SEBI Act. In addition to any award of penalty by the Adjudicating Officer under the Act, if any person contravenes or attempts to contravene or abets the contravention of the provisions of this Act or of any rules or regulations thereof. , he shall be punishable with imprisonment for a term which may extend to one year, or with fine or with both.Further, non compliance of the directions of the Adjudicating Officer shall be punishable with imprisonment for a term which shall not be less than one month, but which may extend to three years or with fine which shall not be less than two thousand rupees, but which may extend to ten thousand rupees or with both.

ii. Monetary penalties under section 15H of the SEBI Act. If a person fails to disclose the aggregate of his shareholding in the body corporate before he acquires any shares of that body corporate, or make a public announcement to acquire shares at a minimum price, he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made out of such failure, whichever is higher iii.Directions under section 11B of the SEBI Act. The Board may, in the interest of securities market, give directions, without prejudice to its right to prosecute under section 24 of the SEBI Act including: a. ) Directing the person concerned not to further deal in securities. b.

) Prohibiting disposal of securities acquired in violation of these regulations. c. ) Direct sale of securities acquired in violation of these regulations. iv. Directions under section 11(4) of the Act. The authority may give the directions to the person in default & the directions may include the following: i.

Suspend the trading of any security in a recognised stock exchange; ii.Restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities; iii. Suspend any office-bearer of any stock exchange or self-regulatory organisation from holding such position; iv.

Impound and retain the proceeds or securities in respect of any transaction which is under investigation v. Attach bank accounts of persons involved in violation for a period not exceeding one month. vi. Direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation v. Cease and desist order in proceedings under section 11D of the Act. vi. Adjudication proceedings under section 15HB of the Act.A residual clause has been provided in the Act, wherein it is mentioned that if any violation act is not specifically covered under the provisions, then the person may be held liable for a penalty which may extend to one crores rupees.

Further, the acquirer or directors of the acquirer company, directors of the target company, the merchant banker(s) would be liable for action for any misstatement or concealment of material information required to be disclosed to the shareholders. Defenses to Hostile Takeover[49] Another important point to be considered over here is the defenses which a company can apply as defenses to a hostile takeover raid. Directors of the company, being in the control if the company, owe a legal, fiduciary and moral responsibility to protect the interest of the company and the shareholders.They, thus have to look into merits of a takeover action, esp. Hostile Raid, and if it is detrimental to the interests of the company as well as shareholders, they need to take defenses against such a raid. The defenses which can be taken up by a target company can be broadly divided into two parts: 1. Advance Preventive Measures 2.

Defense in face of Takeover bid Advance Preventive Measures 1. Strategic issue of shares: As a preventive measure to hostile takeover, there can be a strategic issue of shares, like joint holding or joint voting agreement of two or more major shareholders, Cross Shareholding between companies, Issue of block of shares to friends and associates, etc. 2. Defensive Merger 3.Issue of Shares with non voting rights: Section 86 allows a company to issue shares with differential voting rights as to dividend, voting or otherwise. Such a strategy may be applied as preventive measure to merger.

4. Convertible Securities: The company may raise debt with issue of more convertible security, like debentures, to make the bid less attractive as such conversion may result into decrease in percentage of shareholding. 5.

Deferment of Shareholder’s control on Assets: The company may resort to various methods which lessens the control of shareholders on the assets of the company. This may be done by various financial arrangements like Sale and Lease back, mortgage of different kinds for long term loans and debenture trusts, etc. 6. Golden Parachutes’ or ‘First-Class Passengers’:: The company may enter into long term agreements of service with directors and senior officials with hefty termination compensation clause, which would deter potential bidders from making a hostile raid.

7. ‘Rainy Day Call’: Company may take several measures like keeping a certain amount of capital uncalled to call in event of a takeover raid. Defenses in face of Takeover 1. Statutory Right: Companies have a right to refuse registration under Section 111 of the Companies Act, 1956. 2. Operation ‘White Knights’: White Knight is a person who in event of a hostile takeover raid bids a higher offer than the hostile raider, so that the hostile raider may no longer be interested in the company.Even in this case the white knight has to comply with the provisions of the takeover code. 3.

Disposing ‘Crown Jewels’: There might be certain valuable assets with the company in which the hostile raider is particularly interested, like a patent, etc. such an asset is called a ‘crown jewel’. The company may, in efforts to avert a takeover bid, dispose such crown jewel, to dissuade the raider. 4. ‘Pac-Man’ Strategy: In this strategy, the target company attempts to takeover the Hostile bidders itself to avoid takeover of itself. 5.

‘Shark Repellant’: Companies may amend there bye-laws and Regulations in such a way that it deters the hostile bidders. Such a strategy is called setting ‘Shark Repellents’. For eg.Company may make a requisite majority of 90% of shareholders to have a special majority or approval of 75% of Board of Directors to call a meeting, etc. 6. Swallowing ‘Poison Pill’: The company may take a step, which might not be desirable in normal course of business to deter hostile bidders, like raising more debt to spoil the normal debt-equity ratio, etc.

7. Grey Knight: there may be a friendly party to the target company who, in event of a hostile raid, takes over the raider itself. This is not an exclusive list; the entrepreneurs keep on coming with various innovative methods as defenses against the takeover raids. It depends upon the innovativeness and the guts of the directors and management of the company, which will determine how to avert a takeover raid.

ConclusionHostility and friendliness is the nature of man who manages the corporate enterprise. Although constituted as a juridical person with a separate legal entity, still the corporate enterprise carries bias with it along wit the man who manages its affairs. In this background, hostility and friendliness amongst corporate units in discernible and mergers and takeovers in corporate world are the natural outcome of the humanly bias and the dispositions influencing the corporate behaviour. Mergers and takeovers are motivated and negotiated under the dominance of these pressures and influences and are inevitable. It has for long been accepted as a part of the dynamic corporate world.And there was a need to regulate it especially in Indian context where the market is not run by the demand and supply rule but on public sentiments. To address this concern, SEBI came out with the Takeover code of 1997 which is a breakthrough for modern corporate regulatory mechanism. It, while not seriously harming the prospects of the acquirer, successfully takes care of the interests of investors.

It is indeed a comprehensive code. Bibliography Books Referred ? Bhandari M. C. , Guide to Company Law Procedures with Corporate Governance, Wadhwa & Company Nagpur, 19th Edition reprint 2006. ? Dr. Verma J. C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure).

5th edition. Bharat Law house. New Delhi. 2008. ? Hicks Andrew & S.H. Goo.

Cases and Materials on Company Law. 5th edition. Oxford University Press. 2004 ? Ramaiya A. , Guide to Company’s Act, Part II, Wadhwa & Company Nagpur 16th edition, reprint 2006 ? Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India. ? Singh Avtar, Company Law, fifteenth Edition, 2007 ? Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition.

Wadhwa & Company. Nagpur. 2006. Legal Framework ? City Code of Takeovers and Mergers ? Companies Act, 1956 ? Listing Agreement ? Report of Bhagwati Committee. Retrieved from http://www.

sebi. gov. in/Index. jsp? ontentDisp=Section&sec_id=1 ? SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1994 ? Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ? Securities and Exchange Board of India, 1992 Case laws referred ? B. P. Amoco Plc v. SEBI (2001)34 SCL 469 (Bom) ? Bombay dyeing & Mfg.

Co. Ltd. . Arun Kumar Bajoria (2001) 107 Comp Cas 535 (CLB) ? Far East Investment Ltd. v. SEBI (2003) 43 SCL 251 (SAT) ? JM Financial and Investment Consultancy services ltd. v.

Adjudicating Officer (2001) 30 SCL 357 (SAT) ? K. K. Modi v. SAT (2002) 35 SCL 230 (Bom) ? Kinsigton Investment Ltd. v.SEBI (2002) 40 SCL 170 (SAT) ? Mega Resources v.

Bombay Dyeing (2003) 116 Comp Cas 205 (CLB) ? Modi Spinning and Weaving Mills ltd. v. SEBI (2001) 34 SCL 816 (SAT) ? R v. Panel on Takeovers and Mergers (1990)1 QB 146, court of appeal. ? Sandip Save v. Chairman SEBI (2003) 41 SCL 47 (SAT) ? Sharad Doshi v. Adjudicating Officer (1998) 29 CLA 383 (SAT) ? Shrish Finance and Investment pvt. Ltd.

v. Shreenivasalu Reddy (2002) Comp Cases 913 (bom) ? Zee Telefilms Ltd. v. Adjudicating and Enquiry Officer, SEBI (2003) 42 SCL 484 (SAT) Other sources ? http://en. wikipedia. org/wiki/Takeovers ? http://www.

takeovercode. com/ ? http://www. thetakeoverpanel. org.

k/new/codesars/DATA/code. pdf. ? Kokot S. Katerina.

The Art of Takeover Defence. Retrieved from http://www. pwc. com/ua/eng/ins-sol/publ/pwc_atd_eng. pdf ? Lesson 34. Takeovers.

Retrieved from http://www. rocw. raifoundation. org/management/bba/mergersmanagement/lecture-notes/lecture-34. pdf ? Nolan Dermot. Capital Structure and Takeover Defences. Retrieved from http://www.

rhul. ac. uk/economics/Research/WorkingPapers/pdf/dpe9904. pdf.

? Poison pills: How they work and how they can be overcome?. Retrieved from http://www. moneycontrol. com/india/news/management/hostile-takeoversdefenses-cos-can-adopt-to-play-safe/13/31/331956. ? www.

sebi. gov. n ———————– [1] Refer http://www. takeovercode.

com/genesis. php [2] refer i) Dr. Verma J. C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure). 5th edition.

Bharat Law house. New Delhi. 2008 ii) Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India.

iii) Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition. Wadhwa & Company.

Nagpur. 2006. iv) http://www. takeovercode. com/kinds_of_takeover. phprefer i) Dr. Verma J.

C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure). 5th edition. Bharat Law house.

New Delhi. 008 ii) Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India. iii) Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition.

Wadhwa & Company. Nagpur. 2006. iv) http://www. takeovercode. com/kinds_of_takeover. php [3] Refer i) Dr. Verma J. C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure). 5th edition. Bharat Law house. New Delhi. 2008 ii) Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India. iii) Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition. Wadhwa & Company. Nagpur. 2006. v) Lesson 34. Takeovers. Retrieved from http://www. rocw. raifoundation. org/management/bba/mergersmanagement/lecture-notes/lecture-34. pdf [4] Refer i) Dr. Verma J. C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure). 5th edition. Bharat Law house. New Delhi. 2008 ii) Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India. iii) Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition. Wadhwa & Company. Nagpur. 2006. iv) Lesson 34. Takeovers. Retrieved from http://www. rocw. raifoundation. org/management/bba/mergersmanagement/lecture-notes/lecture-34. df [5] Hicks Andrew & S. H. Goo. Cases and Materials on Company Law. 5th edition. Oxford University Press. 2004 [6] retrieved from http://www. thetakeoverpanel. org. uk/new/codesars/DATA/code. pdf. [7] R v. Panel on Takeovers and Mergers (1990)1 QB 146, court of appeal. [8] Refer i) Dr. Verma J. C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure). 5th edition. Bharat Law house. New Delhi. 2008 ii) Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India. iii) Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition. Wadhwa & Company. Nagpur. 2006. 9] Refer i) Dr. Verma J. C. Mergers, Amalgamation and Takeovers (Concept, Practice ad Procedure). 5th edition. Bharat Law house. New Delhi. 2008 ii) Seth Dua & Associates, Joint venture & mergers & Acquisition in India, legal & Tax Aspects, Lexis Nexis Butter Worth, India. iii) Sridharan & Pandian. Guide to Takeovers and Mergers. 2nd Edition. Wadhwa & Company. Nagpur. 2006. iv) http://www. takeovercode. com/necessity_of_takeover_code. php [10] the whole report can be found at http://www. sebi. gov. in/Index. jsp? contentDisp=Section&sec_id=1 [11] refer to FAQs on takeovers provided by SEBI. Retrieved from http://www. sebi. gov. in/Index. jsp? ontentDisp=Section&sec_id=6 [12] Reg 2(c) [13] B. P. Amoco Plc v. SEBI (2001)34 SCL 469 (Bom) [14] Reg 2(o) [15] Reg 2(b) [16] Naagraj v. P Sri Sai Ram Adjudicating Officer SEBI (2001) 33 SCL 295 (SAT) [17] supra note 13 [18] Reg 2(e)(1) [19] refer Shrish Finance and Investment pvt. Ltd. v. Shreenivasalu Reddy (2002) Comp Cases 913 (bom), Modi Spinning and Weaving Mills ltd. v. SEBI (2001) 34 SCL 816 (SAT), K. K. Modi v. SAT (2002) 35 SCL 230 (Bom) [20