June 22, 2018

SEBI has decided to amend SAST to grant additional time

SEBI in its board meeting held on 21.06.2018, decided to, inter alia, amend SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST”) and Review of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”) and replace SEBI (Buy-back of Securities) Regulations, 1998 with new SEBI (Buy-back of Securities) Regulations, 2018.
SEBI has decided to amend SAST to grant additional time for upward revision of open offer price till one working day before the commencement of the tendering period. SEBI also proposes to amen SAST by simplifying the language, removing redundant provisions and inconsistencies, updating the references to the Companies Act, 2013 / other new SEBI Regulations, and incorporating the relevant circulars, FAQs, informal guidance in the SAST.
SEBI has also approved reframing a new set of SEBI (Buy-back of Securities) Regulations, 2018 in lieu of the extant SEBI (Buy-back of Securities) Regulations, 1998. In order to make the new Buyback Regulations self-contained, relevant provisions outlined under Sections 68 and 70 of the Companies Act, 2013 shall be incorporated in the said regulations.
Further, SEBI proposes to make the following amendments in ICDR Regulations:
  1. The requirement of announcing price band five working days before opening of the issue would be reduced to two working days before opening of the issue.
  2. Financial disclosures to be made for 3 years as against the present duration of 5 years
  3. Restated and audited financial disclosures in the offer document to be made on consolidated basis only. Audited standalone financials of the issuer and material subsidiaries to be disclosed on the website of the issuer company.
  4. Incorporation of the principles governing disclosures of Indian Accounting Standards (IndAS) on Indian GAAP (IGAAP) Financials.
  5. Threshold for submission of draft letter of offer to SEBI in case of rights issues to be increased to Rs. 10 Crores as against the earlier prescribed Rs. 50 Lakhs.
  6. Shortfall of up to 10% in minimum promoters’ contribution may be met by institutional investors such as by foreign venture capital investors, scheduled commercial banks, public financial institutions and insurance companies registered with Insurance Regulatory and Development Authority of India, in addition to Alternative Investment Funds, without being identified as “Promoters”.
  7. For a company to be eligible to make a fast track rights issue, it should not have any audit qualifications or adverse opinion.
  8. Deletion of chapter on Institutional Placement Programme and provisions pertaining to safety net and IPO grading.
  9. With respect to the Promoter group, the concept of immediate relative to be retained as against the proposed concept of ‘relative’. Further, the shareholding threshold for identifying promoter group has been revised from 10% to 20%.
  10. In case the promoter is a body corporate, any body corporate in which the promoter holds 20% or more or which holds 20% or more of the promoter would be classified as being part of the same promoter group. Also, in case the promoter is a body corporate, any body corporate in which a group of individuals or companies or combinations thereof, which holds 20% or more of the equity share capital in that body corporate, also holds 20 % or more of the issuer, can be classified as promoter group only if they are acting in concert.
  11. Definition of group companies has been made more specific by clarifying that group company/ies, shall include such companies (other than promoter(s) and subsidiary(ies)) with which there were related party transactions, during the period for which financial information is disclosed (3 years), as covered under the applicable accounting standards and also other companies as considered material by the board of the issuer.
You may check the the minutes of the said board meeting by clicking at the following link https://bit.ly/2tiPCca
For any details and clarifications, please feel free to write to:
Ms. Megha Sharma[email protected]