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New Developments in Capital Market 03.09.2011
AGENDA 03.09.2011
03.09.2011 ,[object Object]
GOVERNING PROVISIONS 03.09.2011 ,[object Object],[object Object],[object Object]
REASON FOR BUY BACK 03.09.2011
03.09.2011 BUY BACK AT A GLANCE ,[object Object],[object Object],[object Object],[object Object]
BUY BACK AT A GLANCE 03.09.2011 ,[object Object],[object Object],[object Object]
SOURCES OF FUNDS 03.09.2011 Provided that no buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities. Section 77A (1) of Companies Act, 1956 states that: A company may purchase its own shares or other specified securities out of— OR OR
03.09.2011 RESTRICTIONS IN BUY-BACK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
METHODS OF BUY-BACK 03.09.2011
PROCESS OF BUY-BACK – TENDER OFFER/ODD -LOT 03.09.2011 Special Resolution, if applicable Board Resolution and Public Notice, if applicable Appointment of Merchant Banker Public Announcement SEBI Clearance & Filing of Final LOO with SEBI & STX and In-principal Approval Filing of Draft Letter of Offer and Declaration of Solvency with SEBI and STX Decision for Buy-back Specified Date Dispatch of LOO and Advt. in Newspaper  Opening of offer for Buy-back Opening of Escrow Account Closure of offer for Buy-back Verification and Acceptance / Rejection of securities COMPANY Payment to Securities holders Extinguishment of Certificates Opening of Special Account
PROCESS OF BUY-BACK – OPEN MARKET PURCHASE THROUGH STOCK EXCHANGE METHOD 03.09.2011 Special Resolution, if applicable Board Resolution and Public Notice, if applicable Appointment of Merchant Banker Public Announcement Daily disclosure to STX about shares bought back Filing of copy of Public Announcement  with SEBI and STX Decision for Buy-back Fortnightly public notice of shares bought-back or on 5% buy-back Payment of Consideration Verification and Acceptance / Rejection of securities Extinguishment of Certificates COMPANY
PROCESS OF BUY-BACK – OPEN MARKET PURCHASE THROUGH BOOK-BUILDING METHOD 03.09.2011 Special Resolution, if applicable Board Resolution and Public Notice, if applicable Appointment of Merchant Banker Opening of Escrow Account Filing of copy of Public Announcement  with SEBI and STX Public Announcement Decision for Buy-back Opening of offer for Buy-back Closure of offer for Buy-back Opening of Special Account Determination of Price Verification and Acceptance / Rejection of securities Payment to Securities holders COMPANY Extinguishment of Certificates
03.09.2011 ,[object Object]
03.09.2011 What is Insider Trading?
03.09.2011 It is dealing in the securities  by a Insider,  who has the knowledge of  material “inside” information  which is not known  to the general public  INSIDER TRADING
03.09.2011 How BAD  It Is ???
03.09.2011 ,[object Object],[object Object],[object Object],[object Object],HOW BAD IT IS ???
03.09.2011 Who   is Insider?
INSIDER WAS IS  CONNECTED  WITH THE COMPANY WHO OR OR DEEMED TO HAVE BEEN CONNECTED AND WHO IS REASONABLY EXPECTED TO HAVE ACCESS  HAS RECEIVED  HAS HAD ACCESS  OR OR TO UNPUBLISHED PRICE SENSITIVE INFORMATION 03.09.2011
03.09.2011 Whether the Auditor and Chartered Accountant (CA) also come within the ambit of term “Insider”? Yes
03.09.2011 Price Sensitive Information
03.09.2011 ANY INFORMATION OR AND TO A COMPANY LIKELY TO  MATERIALLY AFFECT  THE PRICE OF  SECURITIES OF THE COMPANY INDIRECTLY DIRECTLY  WHICH RELATES WHICH IF PUBLISHED PRICE SENSITIVE INFORMATION
03.09.2011 DEEMED PRICE SENSITIVE INFORMATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
DISCLOSURE REQUIREMENT 03.09.2011 ,[object Object],[object Object],[object Object],[object Object]
03.09.2011 ,[object Object]
03.09.2011 NEED OF SEBI TAKEOVER REGULATIONS
SALIENT FEATURES  AND  Impact 03.09.2011
03.09.2011 KEY DEFINITIONS
Who With PACs Or Or Voting Rights In Target Company Either Or Acquires Directly Indirectly Agrees to Acquire Shares Or Or Control Himself ACQUIRER As Per TRAC Report Through PACs Or 03.09.2011
Control Includes Right to  Control the management Exercisable Or with Or By virtue of Appoint majority of directors Directly Indirectly Control of Policy decision Individually PAC Shareholding CONTROL Management Rights Shareholders Agreement Voting Agreement As per SEBI Press Release dated July 28, 2011 03.09.2011
CHANGE IN CONTROL 03.09.2011 As Per TRAC Report
FREQUENTLY TRADED SHARES 03.09.2011 As Per TRAC Report
SHARES 03.09.2011 ,[object Object],[object Object],[object Object],As Per TRAC Report
IDENTIFIED DATE 03.09.2011 Specified Date Identified Date A date falling on the  10th business  day prior to  tendering period A date not later than the  30th day  from the date of the  PA As Per TRAC Report
03.09.2011 INITIAL THRESHOLD  AND  CREEPING ACQUISITION
INCREASE IN THRESHOLD 03.09.2011 As per SEBI Press Release dated July 28, 2011 INITIAL THRESHOLD Malaysia Hong Kong Australia U.K. 33 30 20 30
IMPACT 03.09.2011 ,[object Object],[object Object],[object Object],[object Object],[object Object]
CREEPING ACQUISITION 03.09.2011 As Per TRAC Report
IMPACT 03.09.2011 ,[object Object],[object Object]
03.09.2011 PROMOTER HOLDING IN LISTED COMPANIES Source: TRAC Report Total Promoter Holding (%) Companies With Promoter Holding Between Market Cap Range (Rs. Mn) No. of Companies Mean  Median 0-15% 15-20% 20-25% 25-30% 0-500 2,477 (61.1%) 45.50% 46.40% 274 (11.1%) 87 (3.5%) 97 (3.9%) 138 (5.6%) 500-2,000 649 (16.0%) 52.60% 54.90% 34 (5.2%) 19 (2.90%) 12 (1.8%) 19 (2.9%) 2,000-5,000 312 (7.7%) 54.30% 55.00% 10 (3.2%) 8 (2.6%) 1 (0.3%) 10 (3.2%) 5,000-10,000 157 (3.9%) 52.20% 54.50% 5 (3.2%) 1 (0.6%) 3 (1.9%) 8 (5.1%) 10,000 and above 459 (11.3%) 55.20% 54.30% 15 (3.3%) 5 (1.1%) 11 (2.4%) 16 (3.5%) Overall 4,054 (100%) 48.90% 50.50% 340 (8.4%) 120 (3.0%) 124 (3.1%) 191 (4.7%)
03.09.2011 OPEN OFFER  AND  ITS RELATED CONCEPTS
INCREASE IN OFFER SIZE 03.09.2011 As per SEBI Press Release dated July 28, 2011
03.09.2011 OFFER SIZE ANALYSIS Source: TRAC Report Offer size (% of total equity capital of Target Company) FY Total <=20% >20% 2006-07 89 77 12 2007-08 118 100 18 2008-09 113 95 18 2009-10 75 65 10 Total 395 337 58 % of Cases 100% 85.32% 14.68%
FREEDOM TO COMPLETE ACQUISITION UNDER SPA 03.09.2011 This provision will allow the acquire to have the representation in the Target Company even before the completion of open offer and to exercise the control over it. As Per TRAC Report Existing Regulations Proposed Regulations Not allowed Until the completion of offer formalities .  ,[object Object],[object Object],[object Object]
ACQUISITION FROM OTHER COMPETING ACQUIRER 03.09.2011 Simplified Rules-An ease for Competitive Bidder for control change Keeping in view the increasing trend of competitive biddings in India this may be taken as an imperative step as compelling two warring groups to continue in a company may not be in the interest of the company and smooth passage to one of the competitive bidders is desirable. As per SEBI Press Release dated July 28, 2011
NON COMPETE FEES 03.09.2011 More beneficial for the shareholders as they will be entitled to get the same price as have been received by the promoters/sellers from the acquirer. As per SEBI Press Release dated July 28, 2011
IMPACT 03.09.2011 Shareholder Promoter Investor Investor + Management+ Control Thus, Payment of Non compete fees or control premium should be allowed.
REDUCTION IN TIME LINE 03.09.2011 The timeline for  completion of the open offer has been reduced from  95 calendar days To  57 Business Days  As Per TRAC Report
03.09.2011 EXEMPTIONS
03.09.2011 NEW EXEMPTIONS INTRODUCED Increase in shareholding pursuant to Buy Back As Per TRAC Report
03.09.2011 ,[object Object],[object Object],NEW EXEMPTIONS INTRODUCED Increase in shareholding pursuant to CDR Scheme As Per TRAC Report
NEW TAKEOVER REGULATIONS-A WIN WIN SITUTAION 03.09.2011 ,[object Object],[object Object],[object Object],[object Object],[object Object]
03.09.2011 Pavan Kumar Vijay Managing Director Corporate Professionals Capital Private Limited SEBI Registered Merchant Banker Regn No.: INM000011435 THANK YOU

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New Development In Capital Market

  • 1. New Developments in Capital Market 03.09.2011
  • 3.
  • 4.
  • 5. REASON FOR BUY BACK 03.09.2011
  • 6.
  • 7.
  • 8. SOURCES OF FUNDS 03.09.2011 Provided that no buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities. Section 77A (1) of Companies Act, 1956 states that: A company may purchase its own shares or other specified securities out of— OR OR
  • 9.
  • 10. METHODS OF BUY-BACK 03.09.2011
  • 11. PROCESS OF BUY-BACK – TENDER OFFER/ODD -LOT 03.09.2011 Special Resolution, if applicable Board Resolution and Public Notice, if applicable Appointment of Merchant Banker Public Announcement SEBI Clearance & Filing of Final LOO with SEBI & STX and In-principal Approval Filing of Draft Letter of Offer and Declaration of Solvency with SEBI and STX Decision for Buy-back Specified Date Dispatch of LOO and Advt. in Newspaper Opening of offer for Buy-back Opening of Escrow Account Closure of offer for Buy-back Verification and Acceptance / Rejection of securities COMPANY Payment to Securities holders Extinguishment of Certificates Opening of Special Account
  • 12. PROCESS OF BUY-BACK – OPEN MARKET PURCHASE THROUGH STOCK EXCHANGE METHOD 03.09.2011 Special Resolution, if applicable Board Resolution and Public Notice, if applicable Appointment of Merchant Banker Public Announcement Daily disclosure to STX about shares bought back Filing of copy of Public Announcement with SEBI and STX Decision for Buy-back Fortnightly public notice of shares bought-back or on 5% buy-back Payment of Consideration Verification and Acceptance / Rejection of securities Extinguishment of Certificates COMPANY
  • 13. PROCESS OF BUY-BACK – OPEN MARKET PURCHASE THROUGH BOOK-BUILDING METHOD 03.09.2011 Special Resolution, if applicable Board Resolution and Public Notice, if applicable Appointment of Merchant Banker Opening of Escrow Account Filing of copy of Public Announcement with SEBI and STX Public Announcement Decision for Buy-back Opening of offer for Buy-back Closure of offer for Buy-back Opening of Special Account Determination of Price Verification and Acceptance / Rejection of securities Payment to Securities holders COMPANY Extinguishment of Certificates
  • 14.
  • 15. 03.09.2011 What is Insider Trading?
  • 16. 03.09.2011 It is dealing in the securities by a Insider, who has the knowledge of material “inside” information which is not known to the general public INSIDER TRADING
  • 17. 03.09.2011 How BAD It Is ???
  • 18.
  • 19. 03.09.2011 Who is Insider?
  • 20. INSIDER WAS IS CONNECTED WITH THE COMPANY WHO OR OR DEEMED TO HAVE BEEN CONNECTED AND WHO IS REASONABLY EXPECTED TO HAVE ACCESS HAS RECEIVED HAS HAD ACCESS OR OR TO UNPUBLISHED PRICE SENSITIVE INFORMATION 03.09.2011
  • 21. 03.09.2011 Whether the Auditor and Chartered Accountant (CA) also come within the ambit of term “Insider”? Yes
  • 23. 03.09.2011 ANY INFORMATION OR AND TO A COMPANY LIKELY TO MATERIALLY AFFECT THE PRICE OF SECURITIES OF THE COMPANY INDIRECTLY DIRECTLY WHICH RELATES WHICH IF PUBLISHED PRICE SENSITIVE INFORMATION
  • 24.
  • 25.
  • 26.
  • 27. 03.09.2011 NEED OF SEBI TAKEOVER REGULATIONS
  • 28. SALIENT FEATURES AND Impact 03.09.2011
  • 30. Who With PACs Or Or Voting Rights In Target Company Either Or Acquires Directly Indirectly Agrees to Acquire Shares Or Or Control Himself ACQUIRER As Per TRAC Report Through PACs Or 03.09.2011
  • 31. Control Includes Right to Control the management Exercisable Or with Or By virtue of Appoint majority of directors Directly Indirectly Control of Policy decision Individually PAC Shareholding CONTROL Management Rights Shareholders Agreement Voting Agreement As per SEBI Press Release dated July 28, 2011 03.09.2011
  • 32. CHANGE IN CONTROL 03.09.2011 As Per TRAC Report
  • 33. FREQUENTLY TRADED SHARES 03.09.2011 As Per TRAC Report
  • 34.
  • 35. IDENTIFIED DATE 03.09.2011 Specified Date Identified Date A date falling on the 10th business day prior to tendering period A date not later than the 30th day from the date of the PA As Per TRAC Report
  • 36. 03.09.2011 INITIAL THRESHOLD AND CREEPING ACQUISITION
  • 37. INCREASE IN THRESHOLD 03.09.2011 As per SEBI Press Release dated July 28, 2011 INITIAL THRESHOLD Malaysia Hong Kong Australia U.K. 33 30 20 30
  • 38.
  • 39. CREEPING ACQUISITION 03.09.2011 As Per TRAC Report
  • 40.
  • 41. 03.09.2011 PROMOTER HOLDING IN LISTED COMPANIES Source: TRAC Report Total Promoter Holding (%) Companies With Promoter Holding Between Market Cap Range (Rs. Mn) No. of Companies Mean Median 0-15% 15-20% 20-25% 25-30% 0-500 2,477 (61.1%) 45.50% 46.40% 274 (11.1%) 87 (3.5%) 97 (3.9%) 138 (5.6%) 500-2,000 649 (16.0%) 52.60% 54.90% 34 (5.2%) 19 (2.90%) 12 (1.8%) 19 (2.9%) 2,000-5,000 312 (7.7%) 54.30% 55.00% 10 (3.2%) 8 (2.6%) 1 (0.3%) 10 (3.2%) 5,000-10,000 157 (3.9%) 52.20% 54.50% 5 (3.2%) 1 (0.6%) 3 (1.9%) 8 (5.1%) 10,000 and above 459 (11.3%) 55.20% 54.30% 15 (3.3%) 5 (1.1%) 11 (2.4%) 16 (3.5%) Overall 4,054 (100%) 48.90% 50.50% 340 (8.4%) 120 (3.0%) 124 (3.1%) 191 (4.7%)
  • 42. 03.09.2011 OPEN OFFER AND ITS RELATED CONCEPTS
  • 43. INCREASE IN OFFER SIZE 03.09.2011 As per SEBI Press Release dated July 28, 2011
  • 44. 03.09.2011 OFFER SIZE ANALYSIS Source: TRAC Report Offer size (% of total equity capital of Target Company) FY Total <=20% >20% 2006-07 89 77 12 2007-08 118 100 18 2008-09 113 95 18 2009-10 75 65 10 Total 395 337 58 % of Cases 100% 85.32% 14.68%
  • 45.
  • 46. ACQUISITION FROM OTHER COMPETING ACQUIRER 03.09.2011 Simplified Rules-An ease for Competitive Bidder for control change Keeping in view the increasing trend of competitive biddings in India this may be taken as an imperative step as compelling two warring groups to continue in a company may not be in the interest of the company and smooth passage to one of the competitive bidders is desirable. As per SEBI Press Release dated July 28, 2011
  • 47. NON COMPETE FEES 03.09.2011 More beneficial for the shareholders as they will be entitled to get the same price as have been received by the promoters/sellers from the acquirer. As per SEBI Press Release dated July 28, 2011
  • 48. IMPACT 03.09.2011 Shareholder Promoter Investor Investor + Management+ Control Thus, Payment of Non compete fees or control premium should be allowed.
  • 49. REDUCTION IN TIME LINE 03.09.2011 The timeline for completion of the open offer has been reduced from 95 calendar days To 57 Business Days As Per TRAC Report
  • 51. 03.09.2011 NEW EXEMPTIONS INTRODUCED Increase in shareholding pursuant to Buy Back As Per TRAC Report
  • 52.
  • 53.
  • 54. 03.09.2011 Pavan Kumar Vijay Managing Director Corporate Professionals Capital Private Limited SEBI Registered Merchant Banker Regn No.: INM000011435 THANK YOU