In a move to make the process of open offers and buy-back offers more efficient and investor-friendly, SEBI has released a consultation paper (Consultation Paper) proposing changes to the timelines related to various activities involved in open offers under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations) and buy-back offers under the SEBI (Buyback of Securities) Regulations, 2018 (Buyback Regulations).
The proposed changes in the timeline of procedural activities are expected to reduce the overall time taken for completion of open offer from 62 working days to 42 working days. It will also reduce the overall time for completion of buyback from 43 working days to 36 working days.
Key proposals are summarized below:
A. Takeover Regulations
SEBI has proposed the following revised timelines vis-à-vis the existing timelines for various procedural activities involved in the open offer:
| Particulars of activities in the open offer process | Existing timeline (in working days) | Proposed timeline (in working days) |
| Public Announcement | T | T |
| Publishing of Detailed Public Statement | T+5 | T+3 |
| Submission of the Draft Letter of Offer with SEBI | T+10 | T+5 |
| Last date for making of a competitive offer (i.e. within 15 working days from the detailed public statement) | T+20 | T+18 |
| Tentative day of receipt of observations from SEBI | T+25 | T+20 |
| Last day for dispatch of the Letter of Offer to the shareholders | T+32 | T+25 |
| Independent Directors Committee Recommendation (latest by) | T+35 | T+28 |
| Pre-Offer Advertisement | T+36 | T+29 |
| Upward revision in the offer price/offer size (latest by) | T+36 | T+29 |
| Start of the tendering/bidding period | T+37 | T+30 |
| Closure of Tendering/Bidding Period | T+47 | T+35 |
| Last day for payment of consideration to the shareholders | T+57 | T+40 |
| Publication of the Post Offer Advertisement | T+62 | T+42 |
The rationale provided for the proposed changes are discussed below in brief:
| Existing timeline | Proposed timeline | Rationale | |
| Streamlining the timelines of making of public announcement (PA), publishing of detailed public statement (DPS) and submission of draft letter of offer (DLOF) with SEBI | Regulation 13(4): DPS to be published by the acquirer through the manager to the open offer not later than 5 working days of the PA. |
It is proposed that the 5 working days' period required for publishing of DPS from the PA may be reduced to 3 working days. | Considering that all the vital information such as details of the acquirers, offer price, details of the sellers, proposed transaction, etc., which is crucial to the shareholders, is already captured in the PA, the timelines between PA, DPS and the DLOF can be reduced for efficiency. |
| Regulation 16(1): DLOF to be filed by the acquirer through the Manager to the Offer, with SEBI within 5 working days from the date of the DPS. |
It is proposed that the requirement of DLOF submission to SEBI within 5 working days from the DPS may be changed to 5 working days from the date of PA, i.e. 2 working days from the date of DPS. | ||
| Regulation 17(1): Money to be deposited in the escrow account at least 2 working days prior to the date of DPS. |
It is proposed that deposit of money in the escrow account may be linked with filing of the DLOF with the SEBI and may be effected at least 2 working days prior to the date of the DLOF. | Opening of escrow account and deposit of money therein is a time-consuming process and since the time for publication of the DPS is proposed to be reduced, provision for escrow is being can be shifted from filing of DPS to filing of DLOF with SEBI. | |
| Rationalizing timeline for dispatch of Letter of Offer | Regulation 18(2): Letter of Offer (LOF) is required to be dispatched to the shareholders whose names appear on the register of members of the target company as of the identified date, within 7 working days from the receipt of comments from SEBI or where no comments are offered by SEBI, then within 7 working days from the expiry of the period. |
It is proposed that the time for dispatch of LOF may be reduced from 7 working days to 5 working days from the date of receipt of SEBI comments/expiry period in case no comment is received from SEBI. | Considering the advancements in technology and
development of logistics, the LOF can now be sent electronically to
the shareholders who hold the shares in the demat form (and hence
the contact details including email addresses of such shareholders
are already registered with their depository participant), which
saves considerable amount of time.
|
| Duration of Tendering Period | Regulation 16(4): The tendering period shall start not later than 12 working days from date of receipt of SEBI's comments and shall remain open for 10 working days. |
It is proposed that the tendering period may start not later than 10 working days from date of receipt of SEBI's comments and remain open for 5 working days. | Based on an analysis made on tendering of shares in the open offer and buy-backs tender offers for the FY 2020-21, it was observed that 91.38% shares and 92.01% shares respectively were tendered during the last 5 days of the tendering period, hence the proposal to reduce the timeline to 5 working days. |
| Payment of consideration to the shareholders who have tendered their shares in the open offer | Regulation 18(10): The acquirer shall, within 10 working days from the last date of the tendering period, complete all requirements under these regulations and other applicable law, relating to the open offer, including payment of consideration to the shareholders who have accepted the open offer. |
It is proposed that the period for payment of consideration may be reduced to 5 working days from the closure of tendering period. | § SEBI, vide circular dated August 13, 2021
streamlined the process of tendering of shares in open offer,
buy-back offer and delisting offer and the shares tendered are
blocked in the account of the shareholders as against the earlier
process of transfer of shares to the clearing corporation for
settlement. § Considering the tendering period of 5 days' in the delisting offers also, the same may be adopted in open offers as well. |
| Publication of post offer public advertisement/ announcement | Regulation 18(12): The acquirer shall issue a post offer advertisement in such form as may be specified within 5 working days after the offer period, giving details including aggregate number of shares tendered, accepted, date of payment of consideration. |
It is proposed that post offer public advertisement/ announcement may be made within 2 working days from the expiry of the offer period. | The details captured in the Post-Offer advertisement include the number of shares tendered, the number of shares accepted, pre-offer shareholding of the acquirer, pre and post open offer shareholding of the public in absolute terms and in % terms, etc. Such details are already available on the closure of the tendering period, based on which payment of consideration is made to the shareholders. |
B. Buyback Regulations
SEBI has proposed the following revised timelines vis-à-vis the existing timelines for various procedural activities involved in buy-back under the Buyback Regulations:
| Particulars of activities in the buy-back offer process | Existing timeline (in working days) | Proposed timeline (in working days) |
| Duration of tendering period | 10 working days | 5 working days |
| Payment of consideration to the shareholders | 7 working days | 5 working days |
The rationale provided for the proposed changes are discussed below in brief:
| Existing timeline | Proposed timeline | Rationale | |
| Duration of Tendering Period | Regulation 9(vi): The offer for buy-back shall remain open for a period of 10 working days. |
It is proposed that tendering period may remain open for 5 working days. | Considering that the same timelines are
being proposed in case of open offers, such timelines may be
implemented in buy-back offers as well.
|
| Payment of consideration to the shareholders who have tendered their shares in the open offer | Regulation 10(ii): Consideration shall be paid/securities be returned within 7 working days of the closure of offer. |
It is proposed that the period for payment of consideration may be reduced to 5 working days from the closure of tendering period. |
The Consultation Paper dated March 25, 2022 is available here and public comments are invited till April 15, 2022.
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