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DISCLOSURE-UNDER-SECURITIES-AND-EXCHANGE-BOARD-OF-INDIA-SUBSTANTIAL-ACQUISITION-OF-SHARES-AND-TAKEOVERS-REGULATIONS-2011
DISCLOSURE UNDER SECURITIES AND EXCHANGE BOARD OF INDIA
(SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011
Introduction
The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ("SAST Regulations") govern disclosures related to substantial acquisitions and takeovers of shares in listed companies. These regulations ensure transparency, protect investor interests, and maintain market integrity by mandating timely disclosures of share acquisitions, encumbrances, and exemptions. This document provides a structured summary of disclosure requirements under various regulations of SAST, highlighting key aspects such as trigger points, reporting timelines, and exemptions.
| Regulation | Made By | Trigger Point | Time Period | To Be Made To | Exemption |
|---|---|---|---|---|---|
| 29(1) | Acquirer and PAC | Acquirer + persons acting in concert (PAC) acquiring 5% or more of the shares or voting rights of the target company shall disclose their aggregate shareholding and voting rights in such target company. | Within 2 working days of the receipt of intimation of allotment of shares, or the acquisition or the disposal of shares or voting rights in the target company. | Every Stock Exchange where the shares of the target company are listed and the target company at its registered office | Not required if such disclosure is covered under *System Driven Disclosure |
| 29(2) | Any Person | Any person + (PAC), holds 5% or more shares or voting rights in a target company, shall disclose the number of shares or voting rights held and change in shareholding or voting rights, if there has been a change in such holdings from the last disclosure and such change exceeds two percent of total shareholding or voting rights in the target company. | Within 2 working days of the receipt of intimation of allotment of shares, or the acquisition or the disposal of shares or voting rights in the target company. | Every Stock Exchange where the shares of the target company are listed and the target company at its registered office | Not required if such disclosure is covered under *System Driven Disclosure |
| 31(1) | Promoter and PAC | Promoter + PAC creating encumbrance on the shares of the target company. | Within 7 working days from the creation or invocation or release of encumbrance as the case may be. | Every Stock Exchange where the shares of the target company are listed and the target company at its registered office | The disclosure requirement shall not be applicable where such encumbrance is undertaken in a depository |
| 31(2) | Promoter | Invocation of such encumbrance or release of such encumbrance of the shares of the target company. | Within 7 working days from the creation or invocation or release of encumbrance as the case may be. | Every Stock Exchange where the shares of the target company are listed and the target company at its registered office | The disclosure requirement shall not be applicable where such encumbrance is undertaken in a depository |
| 31(4) | Promoter | The promoter of every target company shall declare on a yearly basis that he, along with persons acting in concert, has not made any encumbrance, directly or indirectly, other than those already disclosed during the financial year. | Within 7 working days from the 31st March every year. | Every Stock exchange where the shares are listed and the Audit Committee of the Target Company | No Exemption |
| 10(5) | Acquirer | ACQUISITION PURSUANT TO EXEMPTION: 1. Acquisition pursuant to inter se transfer of shares amongst qualifying persons 2. Acquisition of shares in a target company from state-level financial institutions or their subsidiaries or companies promoted by them, by promoters of the target company pursuant to an agreement between such transferors and such promoter 3. Acquisition of shares from a venture capital fund, AIF, FVCI, by promoters. | At least four working days prior. | Every Stock exchange where the shares are listed | No Exemption |
| 10(6) | Acquirer | Any acquisition made pursuant to exemption provided in Regulation 10. | Within 4 Working days from the date of Acquisition. | Every Stock exchange where the shares are listed | No Exemption |
| 10(7) | Acquirer | In respect of any acquisition of or increase in voting rights pursuant to exemption provided for in clause (a) of sub-regulation (1), sub-clause (iii) of clause (d) of sub-regulation (1), clause (h) of sub-regulation (1), sub-regulation (2), sub-regulation (3) and clause (c) of sub-regulation (4), clauses (a), (b) and (f) of sub-regulation (4), submit a report in such form as may be specified along with supporting documents to the Board giving all details in respect of acquisitions, along with a non-refundable fee of rupees one lakh fifty thousand by way of direct credit into the bank account through NEFT/RTGS/IMPS or online payment using the SEBI Payment Gateway. | Within 21 working days from the date of Acquisition. | To the Board (SEBI) | No Exemption |
*SYSTEM DRIVEN DISCLOSURE:
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Automation of Disclosure, wherein Under SDD, relevant disclosures shall be disseminated by the Stock Exchanges based on aggregation of data received from the Depositories, without human intervention.
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How it works?
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Listed Entities to provide details of PAN/Account numbers of Promoter/Promoter Group to Depositories
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Depositories shall share the transactions for promoter/promoter group to Stock Exchange(s) on a daily basis
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Stock Exchange(s) shall combine all the transactions and calculate whether the entities have triggered the thresholds as prescribed under the provisions of Regulation 29.
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Stock Exchange(s) shall disseminate disclosures if the threshold is exceeded.
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Entities required to continue manual disclosures even after SDD:
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Disclosure requirement due to acquisition or disposal of shares by acquirer together with PACs.
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Disclosure requirement where shares are held in physical form by acquirer and/or PACs.
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Listed companies that have not provided PAN of promoters to the designated depository or have not appointed any depository as their designated depository.
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Companies exclusively listed on an exchange that has not developed infrastructure for automation of disclosures.
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Conclusion
The SAST Regulations ensure that significant acquisitions and changes in shareholding are disclosed in a timely manner to maintain market transparency and protect investors. System Driven Disclosures (SDD) have automated many reporting obligations, reducing human intervention and improving efficiency. However, certain circumstances still require manual disclosures, ensuring regulatory oversight remains robust. Compliance with these regulations is crucial for maintaining a fair and transparent securities market.
DISCLAIMER The interpretation provided herein is intended solely for informational purposes and does not constitute professional advice or opinion. The interpretation is based on available information and may not capture all relevant facts or nuances of the subject matter. The interpretation is not to be construed as legal advice, and no liability is accepted for any consequences arising from it.
CS J SWARNALAKSHMI
LegalMantra.net