New Delhi: Capital markets regulator Sebi on Monday unveiled a new mechanism for tendering and settlement of shares through stock exchanges that will make delisting, buyback and takeover offers easier.
Releasing the detailed procedure to be followed under the new mechanism, Sebi said the acquirer will need to place an order at the beginning of the tendering period for buying the required number of shares through his stock broker.
During the tendering period, the order for selling the shares will be placed by eligible sellers through their respective brokers during normal trading hours.
These shares would be transferred to a special account of the clearing corporation specifically created for this purpose prior to placing the bid. The brokers will also forward to the Clearing Corporation details regarding the tendered shares.
The cumulative quantity tendered will be made available online to the market throughout the trading session at specific intervals by each of the stock exchanges during the tendering period on the basis of shares transferred to the special account of the clearing corporation.
This circular would be applicable to all the offers for which public announcement is made on or after July 1, 2015.
For all impending offers, acquirer/promoter/company would have the option to follow the existing mechanism.
"In case an acquirer or any person acting in concert with the acquirer who proposes to acquire shares under the offer is not eligible to acquire shares through stock exchange due to operation of any other law, such offers would follow the existing 'tender offer method'," Sebi said in a circular.
In case of competing offers under Takeover Regulations, if one of the acquirers is ineligible to acquire shares through stock exchange mechanism, then all acquirers would follow the existing 'tender offer method'.
"The facility for acquisition of shares through stock exchange mechanism pursuant to offer shall be available on the stock exchanges having nationwide trading terminals in the form of a separate window (the acquisition window)," Sebi said in a circular.
The acquirer or company may choose to use 'acquisition window' provided by more than one stock exchange having nationwide trading terminal and in that case, one of bourse would be chosen as the designated stock exchange
The recognised bourse having nationwide trading terminals would also facilitate acquirers to provide the platform in case of companies exclusively listed on recognised regional stock exchanges.
The acquirer would have to appoint a stock broker registered with Sebi for the offer. Such broker may also undertake transactions on behalf of sellers.
In case of offer under Takeover Regulations, the merchant banker would have to finalise the basis of acceptance of the shares depending upon the level of acceptances received in the offer.
With regard to offer under the buyback regulations, the company is required to announce a record date for the purpose of determining the entitlement and the names of the security holders who are eligible to participate in the proposed share sale programme.
Based on this information, eligible shareholders can tender shares in the buyback using the acquisition window of the stock exchanges through selling brokers.
"However, reconciliation for acceptances shall be conducted by the merchant banker and the Registrar to the offer after closing of the Offer and the final list shall be provided to the stock exchanges to facilitate settlement," it added.
Once the basis of acceptance is finalised, the clearing corporation would facilitate execution and settlement of trades by transferring the required number of shares from the special account to the escrow account of acquirer.
"The trades shall be carried out in the manner similar to settlement of trades in the secondary market process including providing an option for direct payout to the shareholders. This would include settlement of trades of physical shares as well," Securities and Exchange Board of India (Sebi) said.
Excess shares, if any, would be returned to the seller brokers by clearing corporation.
Sebi said that additional disclosures including name and address of the stock broker appointed by the acquirer and details of the special account opened with clearing corporation would be required in the public announcement for delisting, Takeover offer and buyback.
For shares which are locked-in, the selling shareholder can tender them in the same manner which is in existence currently, that is through off-market route.
