SEBI Amends Takeover Regulations: Key Changes Effective May 2024

Amendments to SEBI Takeover Regulations: May 2024 Update

On May 17, 2024, the Securities and Exchange Board of India (SEBI) introduced amendments to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. These changes, effective upon their publication in the Official Gazette, pertain to the exclusion of price effects on the equity shares of a target company and the listed equity shares offered as consideration due to substantial price movement and confirmed events or information. This adjustment aligns with the framework set forth in sub-regulation (11) of regulation 30 of the listing regulations, which governs offer price determination under the regulations.

Notification Details

Pursuant to the powers granted under section 30, in conjunction with clause (h) of sub-section (2) of section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board has enacted the following regulations amending the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011:

1. Title: The title of these regulations will be the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2024.

2. Effective Date: These regulations will take effect on the date they are published in the Official Gazette.

3. Amendments to Existing Regulations:

   • Regulation 8: A new sub-regulation (17) shall be added after sub-regulation (16), stating:
     • (17) The impact on the price of the equity shares of the target company resulting from material price movement and confirmation of reported events or information may be excluded under the guidelines specified in sub-regulation (11) of regulation 30 of the listing regulations for establishing the offer price as per this regulation.
   • Regulation 9: A new sub-regulation (6) will be added following sub-regulation (5), indicating:
     • (6) The impact on the price of listed equity shares offered as consideration, attributable to material price movement and confirmation of reported events or information, may be excluded based on the framework described in sub-regulation (11) of regulation 30 of the listing regulations for determining the price of such equity shares as per this regulation.

Footnotes for Reference

1. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 were published in the Gazette of India on September 23, 2011, under No. LAD-NRO/GN/2011 12/24/30181.

2. A timeline of subsequent amendments to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 includes:

   • March 26, 2013 (Regulations, 2013)
   • October 8, 2013 (Listing of Specified Securities on Institutional Trading Platform Regulations)
   • Various amendments from 2014 to 2023, as detailed in the original notification.

Conclusion

The amendments introduced by SEBI reflect a significant shift in the regulatory framework concerning price determination in substantial acquisitions. Stakeholders must remain informed about these changes to ensure compliance and strategic planning in share acquisitions and takeovers.