Corporate Debt Restructuring

1. Objective

1.1. This memorandum seeks approval of the Board to amend SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“ICDR Regulations, 2018), pursuant to corporate insolvency resolution process under Insolvency and Bankruptcy Code 2016 (IBC) and Reserve Bank of India (RBI) circular dated February 12, 2018.

2. Background

General Exemptions from obligation to make open offer

2.1. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Regulations, 1997”) did not provide any general exemption relating to acquisition of shares pursuant to corporate debt restructuring.

2.2. SEBI had constituted the Takeover Regulations Advisory Committee (“TRAC”) headed by Shri C. Achuthan with the mandate to examine and review the Takeover Regulations of 1997 and to suggest suitable amendments, as deemed fit. The TRAC submitted its report dated July 19, 2010 based on which the new Takeover Regulations were notified in 2011.

2.3. Based on TRAC recommendations, the Takeover Regulations provided exemption from open offer obligations, if the trigger was pursuant to corporate debt restructuring under the scheme prescribed by the RBI, provided that such scheme has been authorized by the shareholders by way of a special resolution passed by postal ballot, and no change in control over the target company takes place through such acquisition. Regulation 10(2) of Takeover Regulations has been placed at Annexure-I.

2.4. Further, Regulations 10(1)(d)(ii) and (iii) of the Takeover Regulations provided exemptions to acquisitions pursuant to a scheme of arrangement or

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reconstruction pursuant to an order of a court or a competent authority under any law or regulation, Indian or foreign.

2.5. Subsequently, Takeover Regulations were amended on May 05, 2015 and exemption from open offer obligations was provided for acquisitions pursuant to conversion of debt into equity by the consortium of banks, financial institutions and other secured lenders under Strategic Debt Restructuring (“SDR”) scheme implemented in accordance with the guidelines specified by RBI. The exemptions were subject to certain conditions such as conversion price being in accordance with RBI’s guidelines, conversion price being certified by two independent qualified valuers, shares remaining locked-in for a period of one year and compliance with applicable provisions of the Companies Act, 2013. It may be noted that the above exemption was applicable only for debt restructuring under SDR scheme.

2.6. Subsequently, representations were received mainly regarding:

a. Where the lenders have acquired shares and propose to divest those shares to a new investor, then the exemption from open offer obligations may be extended to such investors; and

b. Exemptions available to the lenders under the SDR scheme may also be extended to other restructuring schemes such as S4A, etc. implemented in accordance with the guidelines of RBI.

2.7. Consultations were held with RBI and subsequently Takeover Regulations were once again amended w.e.f. September 11, 2017 mainly for the following:

a. Existing relaxations granted for SDR scheme, under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations, 2009”) and Takeover Regulations, were extended to the lenders for other restructuring schemes in terms of guidelines prescribed by RBI. The relaxations were also extended to the new investors acquiring shares in distressed companies pursuant to a restructuring scheme in terms of guidelines prescribed by RBI. These exemptions were made available for

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all such restructuring schemes where RBI guidelines prescribe a pricing formula.

b. In respect of acquisition of shares by new investors, requirements were prescribed such as requirement of approval by special resolution and lock- in of their shareholding for a minimum period of 3 years for granting the aforesaid relaxations. The notice for the shareholders’ meeting may include various disclosures regarding the new investor such as identity, business model, growth of business, financials, past track record in turning around companies, if any, proposed way forward for turning around the stressed company under reference, etc.

2.8. The existing provisions under Regulations 10(1)(i) and 10(1)(ia) have been brought out at Annexure-II.

2.9. During the same time, w.e.f. August 14, 2017, the Takeover Regulations were amended to provided exemption from open offer obligations for:

a) acquisitions pursuant to resolution plan approved under the IBC (Regulation 10(1)(da) of Takeover Regulations was inserted); and

b) acquisitions pursuant to scheme of arrangement or reconstruction pursuant to an order or a Tribunal (“Tribunal” was inserted under Regulation 10(1)(d)(ii) and (iii) of Takeover Regulations).

2.10. The existing provisions under Regulations 10(1)(d)(ii), 10(1)(d)(iii) and 10(1)(da) have been brought out at Annexure-III.

Conditions for preferential issue (including pricing)

2.11. ICDR Regulations, 2009 was amended on May 05, 2015 and Regulation 70(5) was introduced for providing exemption to application of Chapter VII (Preferential Issue)1 if the preferential issue was made to the consortium of banks and financial institutions pursuant to conversion of their debt, as part of the strategic

1 Chapter VII of ICDR Regulations, 2009 is on Preferential Issue and has provisions for relevant date, conditions of preferential issue, disclosures, timing of allotment, pricing, lock-in etc. Page 3 of 27

debt restructuring (SDR) scheme. The exemptions were subject to certain conditions such as conversion price being in accordance with RBI’s guidelines (and not being less than face value of equity share), conversion price being certified by two independent qualified valuers, shares remaining locked-in for a period of one year and compliance with applicable provisions of the Companies Act, 2013. It may be noted that the above exemption was applicable only for debt restructuring under SDR scheme.

2.12. The ICDR Regulations were amended w.e.f. August 14, 2017 and the exemption relating to application of conditions for preferential issues was extended to the lenders for other restructuring schemes in terms of guidelines prescribed by RBI. Further, the relaxations were also extended to persons acquiring shares (other than lenders) in distressed companies pursuant to a restructuring scheme in terms of guidelines prescribed by RBI. The amendments in ICDR 2009 w.e.f. August 14, 2017 have been brought out at Annexure-IV.

2.13. The ICDR Regulations, 2009 have been replaced with new ICDR Regulations, 2018 w.e.f. November 09, 2018. The relevant regulations in ICDR Regulations, 2018 are Regulation 158(6) and Regulation 158(7) applicable for lenders and persons (other than lenders) respectively. The existing provisions under Regulations 158(6) and (7) of ICDR Regulations, 2018 have been placed at Annexure-V.

3. RBI’s Circular dated February 12, 2018

3.1. RBI has vide circular dated Feb 12, 2018 repealed all the previously existing schemes/ circulars on corporate debt restructuring and prescribed the following procedure to the banks regarding resolution of stressed assets:

a) In respect of accounts with aggregate exposure of the lenders at Rs. 20 billion and above, the resolution plan (RP) shall be implemented within 180 days from the date of first default.

b) If a RP in respect of such large accounts is not implemented within 180 days, lenders shall file insolvency application, singly or jointly, under the Insolvency

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and Bankruptcy Code 2016 (IBC) within 15 days from the expiry of the said timeline.

c) For other accounts with aggregate exposure of the lenders below Rs 20 billion and, at or above Rs. 1 billion, the Reserve Bank intends to announce, over a two-year period, reference dates for implementing the RP to ensure calibrated, time-bound resolution of all such accounts in default.

4. Our Comments

4.1. Acquisitions have in the past been exempted from open offer, if the same have been done under a statutory framework e.g. Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFESI), scheme of arrangements pursuant to an order of a court or Tribunal. Most recently in 2017, SEBI has provided exemption to acquisitions pursuant to resolution plan approved under Insolvency and Bankruptcy Code, 2016 (IBC).

4.2. As per the recommendation of TRAC, exemption for acquisitions pursuant to Debt Restructuring Scheme of RBI was provided for the first time in Takeover Regulations, 2011. The exemption was applicable only for acquisitions not involving change in control and provided that such scheme has been authorised by shareholders by way of a special resolution passed by postal ballot. As such, the exemption was introduced in a restricted manner with necessary safeguards to protect interest of shareholders.

4.3. The exemptions to acquisitions pursuant to Debt Restructuring Schemes of RBI were subsequently expanded in 2015 and 2017:

a) In 2015, exemption was provided to consortium of banks, financial institutions and other secured lenders under Strategic Debt Restructuring(SDR), subject to certain conditions (more details in paragraph 2.4 above);

b) In 2017, the exemption was extended to the lenders for all restructuring schemes where RBI guidelines prescribe a pricing formula. The relaxations were also extended to the person(s) acquiring shares in distressed companies Page 5 of 27

pursuant to a restructuring scheme, subject to certain conditions. The exemption was provided for acquisitions of shares by persons by way of i) allotment by the target company or ii) purchase from the lenders as part of Debt Restructuring Scheme (more details provided in paragraphs 2.5 - 2.7 above).

4.4. Further, in 2017, at nearly the same time (w.e.f. August 14, 2017), it was decided to exempt open offer obligations for acquisitions pursuant to resolution plans approved by the National Company Law Tribunal (NCLT) under the IBC.

4.5. Subsequently, in Feb., 2018, RBI has repealed its earlier debt restructuring schemes and prescribed the procedure to the banks regarding resolution of stressed assets. The resolution process under IBC is well defined and has a statutory backing. The IBC enables initiation of Corporate Insolvency Resolution Process (CIRP) immediately after the default has occurred. Also the Committee of creditors needs to act in the best interest of all the stakeholders of the corporate debtor.

4.6. In respect of large exposures (mentioned at paragraph 3.1) above, while the RBI circular provides for filing of application for insolvency under IBC (which is already exempt from open offer obligations), RBI has however provided 180 days transition window for working out a resolution prior to IBC proceedings. The resolution during these 180 days is completely driven by lenders to the company and may not necessarily be aligned to the best interests of other stakeholders, including shareholders. It is not a case of transparently selecting the best possible resolution plan from amongst the alternative resolution plans, as is the case with NCLT driven resolution process under IBC.

4.7. The exemptions provided by SEBI in the Takeover Regulations and ICDR Regulations were given based on the debt restructuring frameworks of RBI that were existent during the amendment by SEBI in 2017 which have now been repealed w.e.f February 12, 2018 and therefore the main basis for granting exemptions is no longer there. The exemption is anyway available under the statutory IBC process.

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4.8. It may also be noted that in the previous frameworks (CDR2 and JLF3), the process of restructuring for accounts with high exposure (Rs. 500 crores or more) involved evaluation by an Independent Evaluation Committee (IEC) of experts. The constitution of the IEC and the funding needs for payment of fees for independent experts were decided by Indian Banks’ Association (IBA) in consultation with RBI. Similarly, in S4A4 framework, all the restructuring had to be submitted before Overseeing Committee (OC). The OC was constituted by IBA in consultation with RBI. The members of OC could not be changed without the prior approval of RBI. Also, in the CDR framework, CDR Standing Forum was formed as a self- empowered body, for laying down policies and guidelines, guiding and monitoring the progress of corporate debt restructuring. The CDR Standing Forum had Chairman of IBA and ED of RBI as members. Therefore, there was well defined role of IBA and RBI in the previous frameworks.

4.9. As RBI has withdrawn the previously existing schemes, our regulations should also not refer to any RBI scheme to reflect the correct picture. The reference to RBI schemes may therefore be deleted from relevant Takeover Regulations and ICDR Regulations, 2018. We may however continue to provide an exemption to lenders for acquisitions pursuant to conversion of their debt into equity as part of debt restructuring as the same may be a necessity in their ordinary course of business.

4.10. It is noted that the exemptions under Regulations 10(1)(d)(ii) and (iii) are currently available for acquisitions pursuant to a scheme of arrangement or reconstruction pursuant to an order of a court or a tribunal or a competent authority under any law or regulation, Indian or foreign. In this regard, it is noted that under the IBC, the corporate insolvency resolution process prevails notwithstanding anything contained in any other law and SEBI has already provided exemption to acquisitions pursuant to resolution plan under IBC. The exemptions under Regulation 10(1)(d)(ii) and (iii) may not be made available to scheme of

2 Corporate Debt Restructuring, 2001 (CDR) 3 Joint Lenders’ Forum (JLF) 4 Scheme for Sustainable Structuring of Stressed Assets (S4A) Page 7 of 27

arrangement / reconstruction pursuant to order of a competent authority, as “competent authority” has not been defined and is open to interpretations.

5. Proposals for consideration

5.1. In view of the above, the following are proposed:

a) The exemptions in ICDR Regulations, 2018 and general exemption from the obligation of making an open offer provided in Takeover Regulations may be continued for allotment of shares to lenders pursuant to conversion of their debt as part of debt restructuring in accordance with RBI guidelines (Regulation 10(1)(i) of Takeover Regulations and Regulation 158(6) of ICDR Regulations, 2018); and

b) However, the exemptions in ICDR Regulations, 2018 and general exemption from the obligation of making an open offer provided in Takeover Regulations may not be made available to persons (other than lenders) (Regulation 10(1)(ia) of Takeover Regulations and Regulation 158(7) of ICDR Regulations, 2018).

c) The exemption from the obligation of making an open offer provided in Regulation 10(1)(d)(ii) and (iii) may be made available only for scheme of arrangement or reconstruction pursuant to order of a court or Tribunal and the reference to “competent authority” may be deleted.

5.2. Therefore, the following amendments are proposed:

ICDR Regulations, 2018

a) In Regulation 158(6), the reference to “scheme” may be deleted.

b) Regulation 158(7) of the ICDR Regulations 2018 may be deleted.

Takeover Regulations

c) Regulation 10(1)(i) may be suitably modified to update the reference to Regulation 158(6) of the current ICDR Regulations, 2018 instead of

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Regulation 70(5) of old ICDR Regulations, 2009. Further, the reference to “scheme” may be deleted.

d) Regulation 10(1)(ia) may be deleted.

e) Considering that the CDR framework of 2001 has been repealed by RBI, Regulation 10(2) of Takeover Regulations may be deleted.

f) The reference to “competent authority” under Regulation 10(1)(d)(ii) and (iii) may be deleted.

5.3. The draft amendments in Takeover Regulations and ICDR Regulations, 2018 have been brought out at Annexures - VI and VII respectively.

5.4. The Board is requested to consider and approve the proposals under above paragraphs and authorize the Chairman to take consequential and incidental steps to give effect to the decisions of the Board.

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Annexure – I

SEBI (SAST) Regulations, 2011

1. Regulation 10(2) of Takeover Regulations provides that:

(2) The acquisition of shares of a target company, not involving a change of control over such target company, pursuant to a scheme of corporate debt restructuring in terms of the Corporate Debt Restructuring Scheme notified by the Reserve Bank of India vide circular no. B.P.BC 15/21.04, 114/2001 dated August 23, 2001, or any modification or re-notification thereto provided such scheme has been authorised by shareholders by way of a special resolution passed by postal ballot, shall be exempted from the obligation to make an open offer under regulation 3.

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Annexure – II

1. Regulations 10(1)(i) and 10(1)(ia) of Takeover Regulations, 2011

(Amendments w.e.f. 11.09.2017 - Regulation 10(1)(i) was substituted and Regulation 10(1)(ia) was inserted)

General exemptions. 10. (1) The following acquisitions shall be exempt from the obligation to make an open offer under regulation 3 and regulation 4 subject to fulfillment of the conditions stipulated therefor,—

(i) Acquisition of shares by the lenders pursuant to conversion of their debt as part of a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India:

Provided that the conditions specified under sub-regulation (5) of regulation 70 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 are complied with.

(ia) Acquisition of shares by the person(s), by way of allotment by the target company or purchase from the lenders at the time of lenders selling their shareholding or enforcing change in ownership in favour of such person(s), pursuant to a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India:

Provided that in respect of acquisition by persons by way of allotment by the target company, the conditions specified under sub-regulation (6) of regulation 70 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 are complied with:

Provided further that in respect of acquisition by way of purchase of shares from the lenders, the acquisition shall be exempted subject to the compliance with the following conditions:

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a) the guidelines for determining the purchase price have been specified by the Reserve Bank of India and that the purchase price has been determined in accordance with such guidelines; b) the purchase price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder:

Provided that till such date on which section 247 of the Companies Act, 2013 and the relevant Rules come into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years; c) the specified securities so purchased shall be locked-in for a period of at least three years from the date of purchase; d) the lock-in of equity shares acquired pursuant to conversion of convertible securities purchased from the lenders shall be reduced to the extent the convertible securities have already been locked-in; e) a special resolution has been passed by shareholders of the issuer before the purchase; f) the issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable law, disclose the following information pertaining to the proposed acquirer(s) in the explanatory statement to the notice for the general meeting proposed for passing special resolution as stipulated at clause (e) of this sub-regulation:

a. the identity including of the natural persons who are the ultimate beneficial owners of the shares proposed to be purchased and/ or who ultimately control the proposed acquirer(s);

b. the business model;

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c. a statement on growth of business over the period of time;

d. summary of audited financials of previous three financial years;

e. track record in turning around companies, if any;

f. the proposed roadmap for effecting turnaround of the issuer. g) applicable provisions of the Companies Act, 2013 are complied with.

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Annexure – III

SEBI (SAST) Regulations, 2011

1. Regulations 10(1)(d)(ii) and (iii) of Takeover Regulations provide that:

10. (1) The following acquisitions shall be exempt from the obligation to make an open offer under regulation 3 and regulation 4 subject to fulfillment of the conditions stipulated therefor,—

…

(d) acquisition pursuant to a scheme,—

…

(ii) of arrangement involving the target company as a transferor company or as a transferee company, or reconstruction of the target company, including amalgamation, merger or demerger, pursuant to an order of a court or a tribunal or a competent authority under any law or regulation, Indian or foreign; or

(iii) of arrangement not directly involving the target company as a transferor company or as a transferee company, or reconstruction not involving the target company’s undertaking, including amalgamation, merger or demerger, pursuant to an order of a court 28[or a tribunal] or a competent authority under any law or regulation, Indian or foreign, subject to,—

(A) the component of cash and cash equivalents in the consideration paid being less than twenty-five per cent of the consideration paid under the scheme; and

(B) where after implementation of the scheme of arrangement, persons directly or indirectly holding at least thirty-three per cent of the voting rights in the combined entity are the same as the persons who held the entire voting rights before the implementation of the scheme. Page 14 of 27

(da) acquisition pursuant to a resolution plan approved under section 31 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).

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Annexure – IV

ICDR Regulations, 2009

[Amendments w.e.f. August 14, 2017]

Regulation 70(5) was substituted with the following:

(5) The provisions of this Chapter shall not apply where the preferential issue of specified securities is made to the lenders pursuant to conversion of their debt, as part of a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

(a) the guidelines for determining the conversion price have been specified by the Reserve Bank of India in accordance with which the conversion price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

(b) the conversion price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder:

Provided that for the purpose of transferring the control, the lenders may transfer the specified securities allotted to them before completion of the lock-in period subject to continuation of the lock-in on such securities for the remaining period, with the transferee;

(d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

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(e) the applicable provisions of the Companies Act, 2013 are complied with, including the requirement of special resolution.

Regulation 70(6) was substituted with the following:

(6) The provisions of this Chapter shall not apply where the preferential issue, if any, of specified securities is made to person(s) at the time of lenders selling their holding of specified securities or enforcing change in ownership in favour of such person(s) pursuant to a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

(a) the guidelines for determining the issue price have been specified by the Reserve Bank of India in accordance with which the issue price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

(b) the issue price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder:

(c) the specified securities so allotted shall be locked-in for a period of at least three years from the date of their allotment;

(e) a special resolution has been passed by shareholders of the issuer before the preferential issue;

(f) the issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable law, disclose the following information pertaining to the proposed allottee(s) in the explanatory statement to the notice for the general meeting Page 17 of 27 proposed for passing the special resolution as stipulated at clause (e) of this sub- regulation:

a. the identity including that of the natural persons who are the ultimate beneficial owners of the shares proposed to be allotted and/ or who ultimately control the proposed allottee(s);

b. the business model;

c. a statement on growth of business over the period of time;

d. summary of audited financials of previous three financial years;

e. track record in turning around companies, if any;

f. the proposed roadmap for effecting turnaround of the issuer.

(g) the applicable provisions of the Companies Act, 2013 are complied with.

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Annexure – V

ICDR Regulations, 2018 [Current Provisions]

 Regulation 158(6):

(6) The provisions of this Chapter shall not apply where the preferential issue of specified securities is made to the lenders pursuant to conversion of their debt, as part of a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

a) guidelines for determining the conversion price have been specified by the Reserve Bank of India in accordance with which the conversion price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

b) conversion price shall be certified by two independent valuers;

c) specified securities so allotted shall be locked-in for a period of one year from the date of their allotment

d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

e) the applicable provisions of the Companies Act, 2013 are complied with, including the requirement of a special resolution.

 Regulation 158(7):

(7) The provisions of this Chapter shall not apply where the preferential issue of specified securities is made to person(s) at the time of lenders selling their holding of specified securities or enforcing change in ownership in favour of such person(s) Page 19 of 27 pursuant to a debt restructuring scheme implemented in accordance with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

a) guidelines for determining the issue price have been specified by the Reserve Bank of India in accordance with which the issue price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

b) issue price shall be certified by two independent valuers;

c) specified securities so allotted shall be locked-in for a period of at least three years from the date of their allotment;

d) lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

e) special resolution has been passed by shareholders of the issuer before the preferential issue;

f) issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other applicable law, disclose the following information pertaining to the proposed allottee(s) in the explanatory statement to the notice for the general meeting proposed for passing the special resolution as stipulated at clause (e) of this sub-regulation:

a. identity, including that of the natural persons, who are the ultimate beneficial owners of the shares proposed to be allotted and/ or who ultimately control the proposed allottee(s);

b. business model;

c. statement on growth of business over a period of time;

d. summary of audited financial statements of previous three financial years;

e. track record, if any, in turning around companies;

Page 20 of 27 f. proposed roadmap for effecting turnaround of the issuer g. applicable provisions of the Companies Act, 2013 are complied with.

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ANNEXURE- VI THE GAZETTE OF INDIA EXTRAORDINARY PART – III – SECTION 4 PUBLISHED BY AUTHORITY NEW DELHI, [●], 2019 SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the [●], 2019

SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) (AMENDMENT) REGULATIONS, 2019

No. [●]. ─ In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, namely:

1. These regulations may be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2019.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, in regulation 10:

(1) In sub-regulation (1):

i. in clause (d) -

a) in sub-clause (ii), the words “or a competent authority” shall be omitted;

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b) in sub-clause (iii), the words “or a competent authority” shall be omitted

ii. in clause (i), the word “scheme” shall be omitted;

iii. in clause (i), the existing proviso shall be replaced with the following proviso,

“ Provided that the conditions specified under sub-regulation (6) of regulation 158 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 are complied with.”

iv. in clause (i), after the proviso, the following explanation shall be inserted:

“Explanation. – For the purpose of this clause, “lenders” shall mean all scheduled commercial banks (excluding Regional Rural Banks) and All India Financial Institutions.

v. clause (ia) shall be omitted.

(2) Sub-regulation (2) shall be omitted

AJAY TYAGI CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA

Footnotes:

1. The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 were published in the Gazette of India on 23rd September, 2011 vide No. LAD-NRO/GN/2011 12/24/30181.

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2. The Principal Regulations were subsequently amended on:

(a) March 26, 2013 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2013 vide No. LAD- NRO/GN/2012 13/36/7368.

(b) October 8, 2013 by the SEBI (Listing of Specified Securities on Institutional Trading Platform) Regulations, 2013 vide No. LAD-NRO/GN/2013- 14/28/6720.

(c) May 23, 2014 by the SEBI (Payment of Fees) (Amendment) Regulations, 2014 vide Notification No. LAD-NRO/GN/2014-15/03/1089.

(d) March 24, 2015 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2015 vide No. LAD- NRO/GN/2014-15/28/542.

(e) May 5, 2015 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2015 vide No. SEBI/LAD- NRO/OIAE/GN/2015-16/004.

(f) August 14, 2015 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2015 vide No. SEBI/LAD NRO/GN/2015-16/009.

(g) December 22, 2015 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Fourth Amendment) Regulations, 2015 vide No. SEBI/LAD- NRO/GN/2015-16/026.

(h) February 17, 2016 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2016 vide No. SEBI/LAD- NRO/GN/2015-16/035.

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(i) May 25, 2016 by the SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2016 vide No. SEBI/ LAD- NRO/GN/2016-17/002.

(j) March 6, 2017 by SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017 vide No. SEBI/LAD/NRO/GN/2016- 17/037 read with notification dated March 29, 2017 vide No. SEBI/LAD/NRO/GN/2016-17/38.

(k) August 14, 2017 by SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2017 No. SEBI/LAD-NRO/GN/2017-18/015.

(l) June 01, 2018 by SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2018 No. SEBI/LAD- NRO/GN/2018/20.

(m) September 11, 2018 by SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2018 No. SEBI/LAD- NRO/GN/2018/33.

(n) December 31, 2018 by SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2018 No. SEBI/LAD-NRO /GN/ 2018/55.

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ANNEXURE- VII THE GAZETTE OF INDIA EXTRAORDINARY PART – III – SECTION 4 PUBLISHED BY AUTHORITY NEW DELHI, [●], 2019 SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the [●], 2019

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) (AMENDMENT) REGULATIONS, 2019

No. [●]. ─ In exercise of the powers conferred under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, namely:

1. These regulations may be called the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2019.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of (Issue of Capital and Disclosure Requirements) Regulations, 2018 -

4. In regulation 158,

(3) In sub-regulation (6),

i. the word “scheme” shall be omitted;

ii. the following explanation shall be inserted:

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“Explanation. – For the purpose of this sub-regulation, “lenders” shall mean all scheduled commercial banks (excluding Regional Rural Banks) and All India Financial Institutions.

(4) Sub-regulation (7) shall be omitted.

AJAY TYAGI CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA

Footnotes:

1. The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 were published in the Gazette of India on September 11, 2018 vide No. SEBI/LAD- NRO/GN/2018/31.

2. The Principal Regulations were subsequently amended on:

(a) December 31, 2018 by SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2018 No. SEBI/LAD- NRO/GN/2018/57.

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