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Home > Information Cafe > Do’s and Don’ts for Investors

Do’s and Don’ts

1. For Investors

  Do’s   Don’ts
Ensure that you are aware of all competitive offers and revision of offer before deciding on accepting the offer. Don’t wait for the last date for the closure of the offer for tendering your acceptance.
Refer to national dailies/ SEBI website for details relating to the Open Offers. Don’t fill in the details of the buyer/transferee in the transfer deed to be sent.
Note that the offer would be subject to statutory approvals, if any, mentioned in the Letter of Offer. Don’t file an incomplete application form/invalid documents.
Check whether the offer will result in delisting of the company.    
In case of dematerialized equity shares ensure credit is received to the Special Depository Account before the closure of the Offer.    
Carefully note the timings/days for hand delivery of the documents mentioned in the letter of offer.    
Before submitting your Form of Acceptance, ensure that you want to tender your shares in the offer to the Acquirer, as the shares once tendered in acceptance of the offer cannot be withdrawn.    
Ensure that signatures on Form of Acceptance, Transfer Deed, Depository Instruction and Form of Withdrawal are in same order and same as those lodged with the company.    
In case of non receipt of Offer Document, you can tender the shares in the Offer by making an application on plain paper giving the necessary details.    

2. For Acquirers

  Do’s   Don’ts
Ensure that you are able to implement the offer and make firm financial arrangements. During the offer period, the acquirer or persons acting in concert with him shall not be entitled to be appointed on the board of directors of the target company subject to certain exceptions.
Ensure that the contents of the public announcement, detailed public statement and other documents are true and adequate and in compliance with the requirements under the regulation. Any of the persons representing or having interest in the acquirer on the board of the target company shall not participate in any matter(s) concerning or “relating” to the offer including any preparatory steps leading to the offer.
A public announcement has to be made in time as specified in Regulation 13. A copy of public announcement shall be sent to the stock exchanges where the shares of the company are listed on the same day and to the Board and to the Target Company within one working day of the short public announcement. The acquirer cannot dispose off or otherwise encumber the assets of the target company for a period of two years from the date of closure of the public offer unless he has stated his intention in the letter of offer.
A Detailed Public Statement shall be published by the acquirer within maximum 5 working days from the date of public announcement. The acquirer and PAC shall not sell shares of the Target Company held by them, during the offer period.
Send a copy of draft letter of offer within 5 working days of detailed public announcement of offer to:
    a. SEBI
    b. Target Company
    c. Stock Exchanges
The acquirer and persons acting in concert with him shall not acquire or sell any shares of the target company during the period between three working days prior to the commencement of the tendering period and until the expiry of the tendering period.
Open an escrow account not later than two working days prior to the date of detailed public statement as provided under Regulation 17. In case of revision of offer price, simultaneously deposit the additional amount in the escrow account.    
Issue an advertisement one working day before the commencement of the tendering period, announcing the schedule of activities for the open offer, the status of statutory and other approvals, if any and other details in such form as e specified.    
The acquirer shall complete the acquisitions contracted under any agreement attracting the obligation to make an open offer not later than twenty-six weeks from the expiry of the offer period.    

3. For Target Company

  Do’s   Don’ts
The Target Company should co-operate with the acquirer in discharging the obligations under these regulations. The Target Company shall not transfer the assets of the Company or its subsidiary without the approval of shareholders in General Meeting.
The Target Company shall furnish a list of shareholders who are eligible to participate in the offer, within 2 working days from the identified date. The target company shall not fix any record date for a corporate action on or after the third working day prior to the commencement of the tendering period and until the expiry of the tendering period.
The board of directors of the Target Company shall constitute a committee of the independent directors who shall provide written reasoned recommendations on the open offer to the shareholders of the Target Company and such recommendations shall be published atleast 2 working days prior to the commencement of tendering period. The Target Company shall not into enter into any material contract.
Facilitate the acquirer in verification of securities tendered for acceptances. The Target Company shall not appoint on the Board of Target Company any person as director who represents or has interest in the acquirer however subject to certain exception.
Transfer the securities in the name of acquirer after the fulfillment of all obligations by the acquirer i.e. after receiving a copy of certificate from the Merchant Banker that all the formalities relating to the open offer have been fully complied with.    

4. Merchant Banker

  Do’s   Don’ts
Ensure that the acquirer has made the short public announcement, detailed public statement, filed the letter of offer and other relevant documents within the time prescribed. The merchant banker shall not deal in the shares of the target company during the offer period.
Ensure that the acquirer has sufficient funds to discharge his obligations under the offer. A Merchant Banker shall not handle an open offer, if it is associated or related with the acquirer or the Target Company in any manner.
Ensure that provision relating to escrow account has been made. The Merchant Banker shall not issue the compliance certificate unless it is fully satisfied that all the requirements of these regulations have been fully complied with by the acquirer.
Ensure that market intermediaries engaged in the open offer are registered with the board. The Merchant Banker shall not release the escrow payment to shareholders.
Ensure that the acquirer has complied with all the Regulations and any other laws and rules as may be applicable    
Ensure that the contents of the public announcement, detailed public statement and other documents are true and adequate and in compliance with the requirements under the regulation and is filled with the Board, Target Company and to all the stock exchanges where the shares of the Target company are listed.    
Furnish a due diligence certificate to the Board (SEBI) along with the draft letter of offer.    
After payment for all the shares acquired under the offer, the merchant banker shall release the balance amount lying in the Escrow account to the acquirers.    
File a report with the Board within 15 working days from the expiry of the tendering period, confirming status of completion of various open offer requirements.