/
Substantial Acquisition Law Overview
Save to my account
Sign up
Substantial Acquisition Law Overview
Substantial Acquisition Law Overview
Study
1
Question
What is the applicability of the Substantial Acquisition Law under Securities Act 2015 Sections 107 - 126?
Answer
The Substantial Acquisition Law applies to the acquisition of substantial shareholding and outlines exemptions and required disclosures when certain thresholds are crossed.
2
Question
What are the exemptions listed under Section 109?
Answer
The exemptions include: Right issues (except when directors dispose after shareholders' decline under Companies Act 2017), shares allocated under underwriting arrangements, shares acquired by financial institutions enforcing securities, shares acquired by succession inheritance, mergers and reconstruction schemes, shares of unlisted companies, conversion option by banks on outstanding loan balances, privatization under the Privatization Commission Ordinance, 2000, transfer of voting shares to relatives without monetary consideration, rehabilitation schemes approved by the commission, and inter se transfer of shares among specific parties.
3
Question
What must an acquirer disclose according to Regulation 4?
Answer
The acquirer must disclose the acquisition to the target company, stock exchanges, and the commission within 2 working days.
4
Question
Define 'Acquirer' as per the Securities Act 2017, Section 2.
Answer
An Acquirer is a person acquiring voting shares or control of a target company directly or indirectly.
5
Question
What is a 'Target Company'?
Answer
A Target Company is a listed company or its holding company whose voting shares or control are acquired or intended to be acquired.
6
Question
What is meant by 'Public Offer'?
Answer
A Public Offer is an offer to acquire voting shares of a target company, including competitive bids.
7
Question
What is the 'Offer Period'?
Answer
The Offer Period is from the public announcement date to the closure or withdrawal date of the public offer.
8
Question
What constitutes a 'Public Announcement'?
Answer
A Public Announcement is an announcement of intention to acquire or offer for acquisition of voting shares, including competitive bids.
9
Question
Who are 'Persons Acting in Concert'?
Answer
Persons Acting in Concert are those cooperating to acquire voting shares or control of a target company, understanding to act together under an agreement, formal or informal. This includes companies, holding companies, subsidiaries, and associates.
10
Question
Define 'Associate' in the context of the Securities Act.
Answer
An Associate refers to a relative of the person, trusts where the person or relative is a trustee, partnership firms where the person or relative is a partner, and private companies where the person or relative is a director or member.
11
Question
What duties does a 'Manager to the Offer' have before making a public announcement?
Answer
The acquirer must appoint a bank, financial institution, or stock exchange member as the Manager to the Offer.
12
Question
What is the definition of 'Voting Shares'?
Answer
Voting Shares are shares in a company's equity carrying voting rights, including securities allowing voting rights.
13
Question
What percentage of voting shares requires disclosure to the Stock Exchange within 2 working days according to Section 110, Regulation 4?
Answer
Acquirers must disclose aggregate shareholding if acquiring more than 10% of voting shares.
14
Question
What restriction is placed on acquiring more than 30% of voting shares?
Answer
No person can acquire more than 30% of voting shares or control of a listed company without a public announcement of the offer.
15
Question
What is the 'Acceptance Period' as defined in Regulation 2?
Answer
The Acceptance Period is the 48th to 54th day from the public announcement of the offer.
16
Question
What should be included in the 'Offer Letter' issued to shareholders?
Answer
The Offer Letter should be issued to shareholders, Global Depository Receipt, and American Depositary Receipt holders, and convertible security holders as per Section 117.
17
Question
Define 'Minimum Offer Price' as per Regulation 13 for frequently traded shares.
Answer
For frequently traded shares, the Minimum Offer Price is the highest among (1) negotiated weighted average price under a share purchase agreement, (2) highest price paid by the acquirer in the past 6 months, (3) weighted average share price over the past 180 days, (4) average share price over the past 28 days, or (5) price based on net asset value by a CA firm with data not older than 6 months.
18
Question
What is required to be included in a public announcement of offer as per Regulation 7?
Answer
The public announcement must be made within 180 days of the intention announcement, must include required information, and be submitted to the target company, stock exchange, and SECP. It must be published in English and Urdu in at least two daily newspapers.
19
Question
What are the 'Rules for Public Offer' from Regulations 8 to 12?
Answer
It includes criteria for book closure, issuing offer letters, and the procedures surrounding the acceptance period.
20
Question
Under Regulation 19, what modes of payment can be used for consideration of voting shares?
Answer
Consideration can be paid in cash, shares of a listed company owned or held by the acquirer, listed debt instruments owned/issued by the acquirer, government debt securities, or a combination of these.
21
Question
What must be done within 2 days of public offer closure according to Regulation 20?
Answer
The acquirer must open a special bank account and deposit the due sum; if non-cash consideration includes securities, these must be posted or credited to the shareholders' securities accounts within the same time frame.
22
Question
Under Section 123, what is required from the acquirer relating to security?
Answer
The acquirer must furnish security for performance obligations with total consideration calculated assuming full acceptance.
23
Question
What are competitive bids according to Section 120?
Answer
A person wishing to make a higher competitive bid must announce their offer within 21 days of the first public announcement and must bid for at least the same number of shares.
24
Question
What are the conditions for withdrawal of a public offer?
Answer
A public offer can be withdrawn if a competitive bid arises, the sole acquirer has died or been declared unsound, or if prescribed circumstances arise.
25
Question
What are General Obligations in the Substantial Acquisition Process for an acquirer?
Answer
Actions must include responsible announcement of the public offer, ensuring it can be fully implemented, disclosing conflicts of interest, and complying with all applicable laws and regulations.
26
Question
What must happen if there is a change in the Manager to the Offer?
Answer
The SECP, securities exchange, and target company must be immediately informed of any changes, and the manager is liable for any default or non-compliance.
27
Question
What is the 'Equality of Treatment' principle as stipulated in Regulation 28?
Answer
All shareholders must be treated equally and similarly within the same class.
28
Question
What rights do minority shareholders have according to Regulation 29?
Answer
Rights of control should be exercised in good faith to avoid oppression of minority or non-controlling shareholders.
29
Question
What is the role of acquirer's representatives regarding vacant positions?
Answer
Facilitate the transfer of shares to the acquirer after fulfilling all requirements of the Act.
30
Question
What representation does an acquirer with 30 voting shares receive?
Answer
Proportional representation on the Board of Directors (BOD).