In a recent adjudication order the Securities and Exchange Board of India (SEBI) held that the disclosure of acquirers as “promoters” in terms of regulation 8(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the takeover code) does not in itself result in acquisition of control by the acquirers under regulation 12.
India Newbridge Investments, India Newbridge Coinvestments, India Newbridge Partners FDI and Maxwell (Mauritius) jointly purchased 2,250,000 equity shares (constituting 15.16% of the total equity capital) of Matrix Laboratories through preferential allotment according to an agreement dated 15 April 2004.
On 18 April 2004 the acquirers made an announcement in terms of regulation 10 of the takeover code. The acquirers’ letter of offer clarified that they did not wish to acquire control of the target, and accordingly that regulation 12 did not apply to the open offer. The letter clarified that the post-open offer shareholding of the acquirers would be 40.46% of the total equity capital of the target.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
