Forum Views - June 2024

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FORUM VIEWS - JUNE 2024

of shares and Persons or Shareholders acting in concert

for not less than three years.

b. Acquisition in the ordinary course of business by

Underwriter, Stockbroker, merchant banker, anyone

who acquires shares under regulation 44 of SEBI (ICDR)

Regulations, 2009 under the safety net scheme, a

registered market-maker of a stock exchange, a

scheduled commercial bank which acts as an escrow

agent for the parties and as discussed above, when

during an invocation of pledge by a scheduled

commercial bank or public financial institutions.

g. Increase in voting rights arising out of beyond the limit

pursuant to buy-back of shares provided such

shareholder reduces his shareholding such that his

voting rights fall to below the threshold referred to in

sub-regulation (1) of regulation 3 within ninety days

from the date.

h. Increase in the voting rights arising out of acquisition

pursuant to a rights issue, a buy back, a share swap

scheme and acquisition of shares in a target company

from a venture capital fund or a registered foreign

venture capital investor by promoters of the target

company pursuant to an agreement.

Apart from the general exemptions provided above, the

Regulations also empowers SEBI to grant exemption from

the requirements of making an open offer or grant a

relaxation from strict compliance with prescribed

provisions of the open offer process upon a specific

application made by the acquirer or the target company.

This exemption is granted by SEBI on a case to case basis.

For instance, in one case, SEBI granted an exemption from

the requirement of making an open-offer when the shares

were acquired by a family trust for streamlining family

succession. The exemption by SEBI was granted on the

grounds that that there would be no effective change in

exercise of voting power or in control/ management of the

target company since the said acquisition of shares was of

a private family trust and the beneficiaries of the acquisition

continued to be the family members.

Zerick Dastur is Proprietor of the Law Firm, practicing in the field of Court

litigation, Dispute Resolution, Arbitration, Securities law and Competition Law.

He is a triple Gold Medalist from Mumbai University having topped the Mumbai

University in Law. His practice covers diverse areas of Corporate, Commercial,

Securities law and Regulatory disputes. He is representing a number of clients in

the Port Sector, Infrastructure and Mining Sectors. He has represented clients in

domestic and international, commercial arbitration matters. He handles a

number of cases relating to securities law litigation and SEBI. He was a former

Partner at the Law Firm, J. Sagar Associates.

He has litigation experience before the Hon’ble Supreme Court, various State

High Courts Statutory Tribunals and Regulators. He has been involved in a

number of matters involving issues of Constitution Law. He has been involved in

landmark matters involving defence of Auditors and Corporate clients before

various Regulators/Civil/Criminal Courts and Tribunals in connection with

Corporate frauds. He has also advised various clients in matters involving

shareholder disputes and minority actions before the NCLT and CLB.

He also practices Securities Law and appears before the Securities Appellate

Tribunal and the SEBI. He has advised clients in connection with Competition

Law issues in everyday business operations including issues relating to anti-

competitive agreements and abuse of dominance by enterprises.

He writes for various newspapers and publications on issues relating to

Corporate law, Arbitration, Commercial and Competition Law. He regularly

writes on securities law for the publication run by the Bombay Stock Exchange

Brokers Forum. He is a regular speaker at events organised by Economic Times,

VC Circle, Indian Merchant Chambers, Consumer Resources, Corporate

Knowledge Foundation and the World Zoroastrian Chamber of Commerce.

He is a Member of the Law Committee of Indian Merchant Chambers and was

involved in the drafting of the Rules for the IMC International Arbitration Centre.

Views of the author are personal and do not constitute legal advice.

(Advocate Zerick Dastur and Advocate Khushil Shah)

The Regulations also empowers SEBI to

grant exemption from the

requirements of making an open offer

or grant a relaxation from strict

compliance with prescribed provisions

of the open offer process upon a

specific application made by the

acquirer or the target

company. This exemption is

granted by SEBI on a case to

case basis.

c. When the acquisition is made in various stages

pursuant to a disinvestment agreement where the

acquirer has made an open offer for acquiring shares at

earlier stages.

d. When the acquisition is made pursuant to a scheme

provided under Regulation 10(1)(d) of the Takeover

Code. For example, the scheme of revival under the Sick

Industrial Companies (Special Provisions) Act, 1985 or

the acquisition pursuant to the provisions of the

Securitisation and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002.

e. When there is an increase in shareholding beyond the

threshold limits without the acquisition of control

pursuant to pursuant to the conversion of equity shares

with superior voting rights into ordinary equity shares.

Any acquisition of shares or voting rights or control of

the target company pursuant to a preferential issue in

compliance with the SEBI (ICDR) Regulations, 2018.

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