sebi:WTM/KMA/CFD/380/04/2011
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Facts / Headnote
Exemption granted from complying with Regulation 11(2) of the Takeover Regulations for increase in voting rights from 63.37% to 73.83% consequent upon proposed buy-back; application disposed off; acquirers directed not to seek further exemption for any further buy-back offers.
Provisions invoked
- s. 19
Regulations
- Reg. 4(4)
- Reg. 11(2)
- Reg. 4(6)
Holding
SEBI granted exemption to the acquirers from complying with Regulation 11(2) of the Takeover Regulations in respect of their increase in voting rights from 63.37% to 73.83% consequent upon the proposed buy-back of equity shares by Deccan Chronicle Holdings Limited. The acquirers were further directed not to seek any further exemption pursuant to any further buy-back offers by the target company.
Full text
Page 2 of 7 target company. As the proposed buy-back by the target company would increase the voting rights of the acquirers from 63.37% to 73.83% thereby requiring them to comply with the requirements of Regulation 11(2) of the Takeover Regulations, the application has been made seeking exemption from SEBI in respect of making a public announcement as provided under the aforesaid regulation, inter alia on the following grounds: a) There is no direct acquisition of shares or voting rights by the acquirers and that the increase in the voting rights from the current holding (63.37%) to 73.83% is on account of reduction in capital, assuming successful buy-back of 3,45,00,000 equity shares. b) The increase in voting rights of the acquirers to 73.83% would not result in any change in control over the target company as the acquirers are already in control. c) Even after buy-back of equity shares by the target company (in case of 100% response), the public shareholding in the target company will remain at a level more than 25%. d) All the acquirers have undertaken vide a deed of undertaking dated November 12, 2010 that they will not participate in the proposed buy- back.
Page 3 of 7 3. The aforesaid application was forwarded by SEBI to the Takeover Panel in terms of Regulation 4(4) of the Takeover Regulations. Thereafter, the Takeover Panel vide report dated March 02, 2011, has recommended as under:
Page 4 of 7 (from 63.37% to 73.83%) in the voting rights of the acquirers which may result out of a proposed buy-back offer by the target company. In this regard, I have perused the certified true copy of the special resolution passed by the shareholders on January 4, 2011 through postal ballot. As per the said resolution, the consent of the company was accorded to the board at its sole option at such time as it may consider appropriate to purchase the (target) company’s fully paid up equity shares of `2/- each at a price not exceeding `180/- per share for an aggregate amount not exceeding `270 crores. The said proposed buy-back when completed and assuming 100% response to the same, would increase the voting rights of the acquirers in the target company from 63.37% to 73.83% though the number of shares held by them would remain the same at 15,42,82,250. It is noted that the aforesaid increase in the voting rights of the acquirers is only incidental to the buy- back offer of the target company. Further, it has been submitted by the acquirers that the said increase would not result in any change in control over the target company, as the acquirers (promoters) are already in control over the target company. As stated above, the acquirers have also undertaken that they would not offer shares in the proposed buy-back offer of the target company. It is also noted that, in the application, it is stated that the target company would buy-back the shares through the stock exchange mech
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Source: SecMarx — sebi:WTM/KMA/CFD/380/04/2011. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.