SEBI issues norms for tendering and settlement of shares via stock exchanges

The Securities and Exchange Board of India (SEBI), on Monday, issued procedures for tendering and settlement of shares through stock exchanges for takeovers, buy back and delisting of entities.

 This is “to facilitate tendering of shares by the shareholders and settlement of the same, through the stock exchange mechanism,” said SEBI in a notification to all stock exchanges, merchant bankers and registrars to the issue.

 This will be applicable to all the offers for which public announcement is made on or after July 1, 2015.

 However, SEBI said that for all impending offers, acquirer/ promoter/ company have the option to follow this mechanism or the existing one.

 SEBI said that the acquirer or company can choose to use the ‘Acquisition Window’ provided by more than one Stock Exchange having nationwide trading terminal and one of the exchanges will be chosen as the “Designated Stock Exchange”.

 The stock exchanges having nationwide trading terminals shall also facilitate acquirers to provide the platform in case of companies exclusively listed on regional stock exchanges.

 It was also stipulated that the acquirer/ company has to appoint a stock broker registered with the Board for the offer. “Such broker may also undertake transactions on behalf of sellers.”

 At the beginning of the tendering period, the order for buying the required number of shares shall be placed by acquirer/ company through his stock broker.

 Further SEBI said that during this period, the order for selling the shares also will be placed by eligible sellers through their respective stock brokers during normal trading hours of the secondary market.

“Such shares would be transferred to a special account of the clearing corporation specifically created for this purpose prior to placing the bid. The stock brokers shall also forward to the Clearing Corporation such details regarding the shares tendered as may be required by the merchant banker.”

Once the basis of acceptance, the clearing corporation would facilitate execution and settlement of trades by transferring the required number of shares from the special account to the escrow account of the acquirer/ company.

The trades would be carried out in the manner similar to settlement of trades in the secondary market process including providing an option for direct payout to the shareholders. “This would include settlement of trades of physical shares as well.”

Excess shares, if any would be returned to the seller brokers by Clearing Corporation. 

This will be applicable to all the offers for which public announcement is made on or after July 1, 2015.

Recommended for you