INDIA: Informal guidance from SEBI on India reeping acquisitions rule for promoters

Friday February 22 2013

The media is reporting that market regulator SEBI has provided guidance on the calculation of the 5% India creeping acquisition rule under the Takeover Regulations.

In reply to a request for informal guidance sought by Aksh Optifibre Ltd, Sebi has reportedly said that the five per cent limit cannot be calculated on the basis of the shareholding before or after the overall share purchase by the promoters. The media is quoting Sebi as stating the following: “It is clarified that the quantum of acquisition of voting rights for the purpose of the regulation…shall be computed separately for every acquisition of voting rights based on paid-up share capital of the target company at the time of acquisition and aggregated for the financial year.”

Aksh Optifibre had a promoter stake of 30.05 per cent as on March 31, 2012 which increased to 33.70 per cent at the end of July 31, 2012. The change in the promoter shareholding of the firm took place through five transactions during April 1, 2012 to July 31, 2012. Aksh Optifibre had sought Sebi`s opinion if the limit of five per cent could be calculated based on its stake as on March 31, 2012 or according to the present share capital of the company.

This information will be updated as further details become available.