SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (‘Takeover Regulations’) has been amended on December 6, 2021, with respect to the delisting provisions as part of the open offer process, with immediate effect. Certain key amendments are as set out below:

i.     If the acquirer wishes to delist the target company, the acquirer needs to declare such intention at the time of making the public announcement and at the time of making the detailed public statement;

ii.    Public announcement, the detailed public statement, and the letter of offer should mention the open offer price determined as per the Takeover Regulations and the indicative price for delisting. This indicative price should include a suitable premium reflecting the price the acquirer is willing to pay, along with full disclosures, rationale and justification for such indicative price and should not be less than the book value of the target company;

iii.   If response to the open offer leads to the delisting threshold of 90% being met, all shareholders tendering their shares would be paid the indicative price. If such delisting threshold is not met, the open offer price will be paid to all shareholders who tender their shares in the open offer;

iv.   The amendment also provides for the governing conditions if the delisting offer is not successful and/or if a competing offer is made;

v.    If the target company fails to get delisted following an open offer and the acquirer breaches maximum permissible non-public shareholding threshold (e., 75%) due to the open offer, a period of 12 months from the date of completion of the open offer will be provided to make further attempts to delist the company. Such further delisting attempt will be considered to be successful if 50% of the residual public shareholding is acquired and delisting threshold is met. However, if the acquirer fails in further delisting attempt, the acquirer would be required to comply with minimum public shareholding requirements within a period of 12 months from the end of aforesaid period of 12 months. The floor price for the further delisting attempt will be higher of: (a) indicative price offered in the first delisting attempt; (b) floor price determined under the SEBI (Delisting of Equity Shares) Regulations, 2021 on the relevant date of the subsequent attempt; and (c) higher of the book value computed on the basis of consolidated and standalone financial statements of the company as per the latest quarterly financial results filed on the recognized stock exchange(s); and

vi.   If the acquirer opts to remain listed post completion of the open offer, the acquirer may also undertake a proportionate reduction of the shares or voting rights to be acquired under the underlying agreement for acquisition, subscription of shares, or voting rights and the purchase of shares so tendered, upon the completion of the open offer process such that the resulting shareholding of the acquirer in the target company does not exceed 75%.