Acquisition of Shares of ICDS Securities Ltd. by ICDS Ltd.

FITTC DEPARTMENT (TAKEOVERS)

ICDS Securities Ltd., (the `target company') a public limited company is engaged in stock broking activities, project advisory services and placements and syndication of equity, debt and other financial activities and is a member of the National Stock Exchange(NSE) and the Bangalore Stock Exchange. 
 
The target company made a public offer for sale in June 1997 of 7,47,800 equity shares of Rs. 10.00 each for cash at par aggregating to Rs. 74.78 lacs. The acquiror (ICDS Ltd.) held 29.84% of the paid-up capital of the target company since 31.8.96. Manipal Finance Corporation Ltd., Sharath Investments Ltd. and Manipal Printers & Publishers Ltd, together held 10.60% of the paid-up capital of the target company since 19.10.95. 
 
An application for exemption in terms of Regulation 3 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 (for brevity's sake referred to as the `Regulations'), dated October 24, 1997 was received by SEBI. The application stated that the acquisition was required as a condition imposed by the NSE for membership of the target company. 
 
The acquiror therefore, acquired 2,90,000 equity shares of the target company from other promoters of the target company viz., 2,50,000 shares from Manipal Finance Corporation Ltd., 15,000 shares from Manipal Printers and Publishers Ltd. and 25,000 shares from Sharath Investments Ltd. 

Facts submitted by the acquirors indicated that the target company was registered on 30.05.95 and commenced business on 22.06.95. The shares held by the transferors were acquired by them in 19.10.95. The facts adduced indicated that three years had not elapsed since the acquisition and the proviso to Regulation 3(1)(e)(iii) requiring that atleast 5% of the shares either individually or collectively for atleast three years prior to the acquisition is not satisfied in the present circumstances. 
 
On consideration of the facts of the case, the submissions advanced and the relevant regulations, and as the promoters have not individually or collectively held atleast 5% of the paid-up capital of the target company for a period of atleast three years prior to the acquisition of 2,90,000 shares, the Chairman, SEBI ordered that exemption in Regulation 3(1)(e)(iii) is not available to them and the acquisition was in violation of regulation 11(1). 
 
Therefore, under the provisions of the SEBI Act, 1992 read with regulations 11(1) and 44 of the Takeover Regulations, taking into consideration the interest of investors, the Chairman, SEBI directed the acquiror viz., ICDS Ltd. vide order dated 23.9.99 to make a public offer under the Regulations within a period of one month from the date of the Order. The public offer is to be made at the price at which the shares were acquired from the promoters or at the average market price of the shares, whichever is higher as per Regulation 20.