Shubham Khare has presented here an extensive case analysis of Re: OCL India Ltd. This case note analyses the recent order passed by the SEBI in the matter of acquisition of voting rights of OCL India Limited pertaining to question that whether buy back of Securities triggers an open offer under the takeover code.
The article discusses the provisions regulating Buy Back of Securities governed by the Companies Act and the Securities and Exchange Board of India (SEBI). The provisions regulating buy back of shares are contained in Section 77A, 77AA and 77B of the Companies Act, 1956 which were inserted by the Companies (Amendment) Act, 1999. This case note analyses the recent order passed by the SEBI in the matter of acquisition of voting rights of OCL India Limited pertaining to the question of whether buy back of Securities triggers an open offer under the takeover code. The case deals with the interplay of buy back of shares and takeover code. This order becomes all the more important in the current scenario wherein SEBI has appointed a Takeover Amendment Committee to examine the existing takeover code and to give recommendations for its overhaul. Any kind of buy back that increases the voting rights of the promoter beyond the benchmark prescribed in the takeover code shall trigger the takeover code. The issue under consideration in the present case is whether increase in voting rights of the promoters from 62.56% to 75% in pursuance to a buy back is in violation of 11(1) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. This matter is governed by Regulation 11(1) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 as it existed in the year 2003. It basically deals with the question that whether buy back of shares which entitles the promoters to exercise voting rights beyond the benchmarks prescribed by the takeover code would trigger the open offer for further acquisition of shares or not. This case can be used as a guiding light in deciding cases of creeping acquisitions by buy back of share under the present takeover code.