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INDIAN M&A HISTORY

The Companies Act, 1956, vide its sections 391 to 396 provides for
amalgamations of companies.
The number and the nature of M&A in the post independence era were
controlled by the socialistic policies of the government.
Prior to 1980, the acquisitions were few and far apart and hostile takeovers
were mostly unheard of.
Post liberalization, the number of acquisitions increased due to a number of
reasons like deregulation of industries, restructuring by family owned
firms, sale of public sector undertakings and the need to achieve economies
of scale in the face of global competition.
Large number of cross-border deals with increasing number of inward and
outward bond of acquisitions.
THE REGULATORY ENVIRONMENT
Clause 40 of the listing agreement that required an acquirer to make an open
offer if the acquisition resulted in his holding 25% or more shares in the
company.
In 1990 even before SEBI became a statutory body, government amended the
listing agreement of the stock exchanges by reducing the threshold limit for an
open offer to 10%.
Enactment of SEBI Act 1992.
SEBI (SAST) Regulations 1994 in November 1994.
SEBI (SAST) Regulations 1997 which was notified on 20
th
Feb 1997.
SEBI (SAST) Regulations 2011. The 2011 regulation was notified on 23
rd
Sept
2011 and came into effect from 22
nd
Oct 2011.
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CHANGES SUGGESTED BY
SEBI (SAST) Regulations 1997 were based on the
recommendations of J ustice Bhagwati Committee (1997) .
the SEBI (SAST) Regulations 2011 were based on the
recommendations of the C. AchutanCommittee (2010).
IMPORTANT CHANGES IN NEW
REGULATIONS
S. No. Description SEBI (SAST)
Regulation, 1997
SEBI (SAST)
Regulation, 2011
1. Threshold limit for triggering a
mandatory open offer
2 Minimum open offer size in the case
of mandatory open offer
3. Provision for Voluntary open offer
4. Provision for payment of a higher
price to a group of shareholders in
case of a non compete agreement
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5. Disclosure norms at specific levels
6. Tendering period
7. Open offer period
8. Withdrawal of tendered shares
DISCUSSION
Increase in the threshold limit for making a mandatory open offer from 15% to
25%.
As per the 2011 regulation the creeping acquisition limit is 5% in a financial
year for all shareholders with 25% or more holdings subject to their holding not
crossing the maximum non public shareholding limit..
The minimum size of the open offer was 20% in the 1997 regulation. This has
been increased to 26% in the 2011 regulation.
The concept of Voluntary Offer has been introduced in the 2011 regulations
permitting a person holding 25% or more shares or voting rights in the company
to make a voluntary open offer for a minimum of 10% of the shares.
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The 2011 regulation simplifies the disclosure norms requiring disclosure to the
stock exchange and the target company when the acquirers aggregate holding
reaches 5% and then onwards in the event of an acquisition or disposal of shares or
voting rights of 2% or more.
Under the new 2011 regulations the open offer period normally would not extend
beyond 57 days compared to 94 days earlier.
The right to withdraw shares tendered against the open offer is not available in the
2011 regulation.