{"id":343,"date":"2015-09-03T13:22:29","date_gmt":"2015-09-03T13:22:29","guid":{"rendered":"http:\/\/caindelhiindia.com\/blog\/?p=343"},"modified":"2021-07-14T11:12:51","modified_gmt":"2021-07-14T11:12:51","slug":"sebi-proposes-to-relax-open-offer-obligations-resulting-from-forfeiture-of-shares-under-takeover-code-2","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/sebi-proposes-to-relax-open-offer-obligations-resulting-from-forfeiture-of-shares-under-takeover-code-2\/","title":{"rendered":"SEBI proposes to relax open offer obligations (resulting from Forfeiture of shares) under takeover code"},"content":{"rendered":"

SEBI PROPOSES TO RELAX OPEN OFFER OBLIGATIONS (RESULTING FROM FORFEITURE OF SHARES) UNDER TAKEOVER CODE<\/span><\/span><\/strong><\/p>\n

Forfeiture of shares is a process specified under Table-F (Articles of Association of a Company Limited by Shares) of Schedule I of the Companies Act, 2013.<\/p>\n

Forfeiture is undertaken by the company as per the provisions of the\u00a0Companies Act 2013 where the company is at full liberty to undertake this to remove\u00a0defaulting shareholders from the Register of Members.<\/strong><\/em><\/p>\n

Regulation 10 of the Takeover Regulations, 2011 provides general exemption from\u00a0the obligations to make an open offer for certain acquisitions, subject to fulfillment of\u00a0the conditions specified therein.<\/p>\n

Increase in voting rights arising out of actions undertaken by the companies under the\u00a0Companies Act 2013 such as Right issues, Buybacks and schemes of arrangement are\u00a0exempt from the open offer obligations under regulation 10 of the Takeover\u00a0Regulations, 2011.<\/p>\n

Further, accrual of voting rights on preference shares where dividend has not been\u00a0paid for two years or more as per sub-section (2) of section 47 of the Companies Act\u00a02013 are exempted from the open offer obligations under regulation 10 of the Takeover\u00a0Regulations, 2011.<\/em><\/strong><\/p>\n

Currently, there is no provision for increase in the voting rights of a shareholder due\u00a0to the expiry of call notice period and forfeiture of partly paid-up shares to be exempt under regulation 10 of the Takeover Regulations, 2011 and an application needs to be\u00a0filed with SEBI for seeking exemption from the open offer obligations in this regard\u00a0under regulation 11 of the Takeover Regulations, 2011.<\/strong><\/em><\/p>\n

It may be noted that the facts of these cases with respect to these applications are\u00a0quite similar. However, a reasoned order must be passed by SEBI in each such case\u00a0which may take enormous amount of time and effort.<\/p>\n

Further, increase in the voting rights of a shareholder due to the expiry of call notice\u00a0period and forfeiture of partly paid-up shares is undertaken under the Companies Act\u00a02013 and is passive in nature.<\/p>\n

Therefore, it is proposed that the Takeover Regulations, 2011 may be amended\u00a0suitably for providing general exemption from the open offer obligations in the cases\u00a0of increase in voting rights as a result of the expiry of call notice period and the\u00a0forfeiture of shares in line with general exemptions available with respect to rights issues, buybacks etc.<\/p>\n

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional\u00a0endeavors. For query or help, contact:\u00a0info@caindelhiindia.com<\/a>\u00a0or call at\u00a0011-2334333<\/p>\n","protected":false},"excerpt":{"rendered":"

SEBI PROPOSES TO RELAX OPEN OFFER OBLIGATIONS (RESULTING FROM FORFEITURE OF SHARES) UNDER TAKEOVER CODE Forfeiture of shares is a process specified under Table-F (Articles of Association of a Company Limited by Shares) of Schedule I of the Companies Act, 2013. Forfeiture is undertaken by the company as per the provisions of the\u00a0Companies Act 2013 …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[647,123,116],"tags":[555,566,502,501,569,572,546,545,561,541,537,436,560,550,538],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/343"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=343"}],"version-history":[{"count":3,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/343\/revisions"}],"predecessor-version":[{"id":1206,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/343\/revisions\/1206"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}