Public Issues

Companies are allowed to access capital markets in accordance with the regulatory guidelines issued by the Securities Exchange Board of India (SEBI), which regulates all matters at India’s capital markets. Public Issue Guidelines are available in the SEBI guidelines and also on the website www.sebi.gov.in. In order to meet listing requirements on a stock exchange, the minimum issued capital of a company needs to be Rs. 30 million (Euro 0.48 million). Some exchanges like Mumbai have their own cut off listing requirements (Rs.100 million) (Euro 1.61 million).

Taking over a company

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations Act provides for takeovers of Indian companies. Bids can be mounted either by an individual, an Indian company, or a foreign company (which has received or expects to receive permissions to invest in India), by itself or through its merchant bankers/ or agents.
An acquirer holding more than 5% shares in any company, or on acquiring more than 5% shares in a company, needs to disclose his aggregate holding to the company and to the exchanges where the shares are listed. A public announcement, with a minimum offer price to all shareholders is necessary, within four working days of entering into an agreement for acquisitions of shares or voting rights. The offer should be verified by a Merchant Banker and contain essential information as stipulated under the guidelines. A minimum aggregate of 20% of the total shareholding shall be acquired, and the post acquisition public holding shall not reduce below 20% of the voting stock of the company. Provisions for competitive offers, revision of offers and withdrawal of offers exist. For further details, please refer towww.sebi.gov.in

Stock Option Plans and Share Buybacks

Companies in certain knowledge-based industries such as software, biotechnology and pharmaceuticals, have been allowed to issue Employee Stock Options (ESOPs) at a discount to market rate, to all or a certain group of employees, in keeping with specified guidelines. ESOPs can also be offered out of the overseas issues (Global Depository Receipts) of a company’s securities.
A company may also buy-back some or all its shares outstanding in the market through:

• Private offers to existing shareholders on a proportionate basis
• Repurchasing securities issued earlier to employees pursuant to a stock option or sweat equity

Buyback of securities requires a special resolution at a shareholders meeting i.e. a three-fourths majority of those present voting in favour of the resolution.