THE COMPANIES ORDINANCE, 1972

Offers to acquire shares and debentures

199.—(1) This section shall apply to an offer to acquire shares or debentures, or an invitation to make tenders of shares or debentures, which is addressed by any person, company or body corporate (in this section called ''the offeror") to more than twenty-five persons, if the purpose of the offer or invitation is the acquisition by the offeror. or by any other person on whose behalf the offer or invitation is made, of : —

(a)    all the issued and outstanding shares or debentures of a company (other than the offeror), or all the issued and outstanding shares or debentures of a particular class of such a company ; or

(b)   a specified fraction of such shares or debentures or of such shares or debentures of a particular class ; or

(c)   sufficient shares of a company (other than the offeror) so as to make the offeror or the person on whose behalf the offer or invitation is made (in consequence of the acquisition and of any shares already held by the offeror or that person, or by nominees for either of them) the holding company of that company ; or

{d) sufficient shares of a company (other than the offerer) so as to give the offeror or the person on whose behalf the offer or invitation is made (in consequence of the acquisition, of any shares already held by the offeror or that person or by nominees for either of them, and of any voting agreements entered into by them or any of them) the right to exercise or control the exercise of not less than twenty per cent of the votes which may be cast in respect of issued and outstanding shares carrying unrestricted voting rights at general meetings of the company ; or

(e) any shares of a company (other than the offeror) if the offeror or the person on whose behalf the offer or invitation is made is the company's holding company ; or

(f) any shares of a company (other than the offeror) if, by any of the means mentioned in paragraph (d) of this subsection, the offeror or person on whose behalf the offer or invitation is made has the right to exercise or control the exercise of not less than twenty per cent of the votes which may be cast in respect of the issued and outstanding shares carrying unrestricted voting rights at general meetings of the company.

(2) An offer or invitation to which this section applies shall be made in writing by a document in the same form and containing the same information sent to all the persons to whom the offer or invitation is addressed, and that document shall contain : —

(a)   a statement of the price or consideration offered for the shares or debentures whose acquisition is sought, or, in the case of an invitation, the range of prices or consideration within which tenders of shares made by the persons to whom the invitation is addressed will be considered by the offeror;

(b)  a statement of the most recent known price at which any of the shares or debentures which are the subject of the offer or invitation, or any shares or debentures of the same c.'ass, have been sold on a stock exchange, or if none of them are quoted on a stock exchange, the most recent known price at which a sale of any of them has taken place ;

(c) if any of the shares or debentures which are the subject of the offer or invitation, or any shares or debentures of the same class, have been quoted on a stock exchange within the preceding twelve months, a statement of the prices, or if more than six sales have taken place within that period, at least six prices at which sales have taken place on a stock exchange during that time, including the highest price and the lowest price at which such sales have taken place;

(d) if the offer or invitation provides for the issue or transfer of shares or debentures of another company or body corporate as consideration for the acquisition of the shares or debentures to which the offer or invitation relates, a statement of the prices mentioned in paragraphs (b) and (c) in respect of sales of any of the shares or debentures so to be issued or transferred, or in respect of sales of shares or debentures of the same class (if any);

(e) a statement of the price or consideration offered or agreed to be paid to eaph director and each substantial sharehplder of the company, and to each director and each substantial shareholder of a company which belongs to the same group of companies as the company, and to each director of a company which is an associated company of any of those companies, for the acquisition from him of any shares or debentures of the same class as the shares or debentures to which the offer or invitation relates ;

(f) a statement of the amount and nature of any payment, consideration, compensation, benefit or advantage arranged to be given to, or conferred on, any person mentioned in paragraph (e) in connection with the offer or invitation, whether conditional on acceptance of the offer or invitation by the persons to whom it is addressed, or by some of them, or not;

(g) the date when the offer or invitation will close, being not less than thirty-five days nor more than forty-two days from the date when the offer or invitation is sent to the persons to whom it is addressed ;

(h) if the offer or invitation is made on behalf of, or for the benefit of, any person not named in it as the offeror, the name and address of that person.

(3)  Not less than three days before an offer or invitation to which this section applies, or any document which sppplements such an offer or invitation, is sent to the persons to whom it is addressed, a copy of it signed by the offeror and by every person on behalf of whom it is made shall be delivered to—

(a)   the Registrar for registration ; and

(b)   the company in respect of whose shares or debentures the offer or invitation is made.

(4)  A copy of any communication (whether written or oral) sent or made by the directors of the company whose shares or debentures are the sibject of the offer or invitation to any of the persons to whom the offer or invitation is addressed in connection with the offer, or invitation shall, within two days after the communication is sent or made, be delivered to the Registrar, and that copy shall be authenticated by the signatures of at least two directors of the company.

(5) If : —

(a)   an offer to which this section applies is expressed to be conditional on its acceptance by the holders of a specified number or fraction of the shares or debentures in respect of which the offer is made ; or

(b)   an invitation to which this section applies is expressed to be conditional on the tender of a specified number or fraction of the shares or debentures to which the invitation relates at or below a specified price, or for, or for not more than, a specified consideration ;

the condition shall, notwithstanding the number of acceptances or tenders received by the offeror, be deemed not to have been fulfilled, and all acceptances of the offer or tenders made in response to the invitation, shall become void, unless within seven days after the date on which the offer or invitation closes the offeror : —

(i) makes a written declaration signed by him, or if the offeror is a company or body corporate, by at least two of its directors, stating that the said condition was fulfilled at or before the date when the offer or invitation closed, and giving particulars of the number and classes of shares or debentures in respect of which the offer or invitation was made and in respect of which the offer has been accepted or tenders have been made in response to the invitation ;

(ii) makes a list in alphabetical order of the holders of shares or debentures who have accepted the offer of tendered shares or debentures in response to the invitation, showing against the name of each holder the number and class of the shares or debentures in respect of which he has accepted the offer or made a tender ;

(iii) makes a written confirmation signed by the offeror, or if the offeror is a company or body corporate, by at l*3st two of its directors, that the offeror will acquire all the shares or debentures specified in the list made under paragraph (ii), or that the offeror will acquire some only of those shares or debentures, and in that case the shares or debentures which the offeror will acquire shall be specified by reference to the names of the holders of them ;

(iv) sends a copy of the declaration and confirmation made under paragraphs (i) and (iii) to each of the persons mentioned in the list made under paragraph (ii);

(v) delivers to the Registrar for registration, and to the company in respect of whose shares or debentures the offer or invitation was made, a copy of the said declaration, list and confirmation.

(6)  Nothing contained in subsection (5) shall affect the right of any person to sue the offeror or the person on whose behalf it makes an offer for damages or other relief in respect of any breach of contract.

(7)  Within seven days after the offeror delivers a copy of the declaration, list and confirmation under subsection (5) to the company in respect of whose shares or debentures the offer or invitation was made, the offeror shall pay, transfer or make available to the persons mentioned in the said list the price or consideration for the shares or debentures to be acquired from them respectively, and the persons so mentioned in the said list shall deliver to the offeror the certificates in respect of the said shares or debentures together with all necessary transfers executed by them.

(8)  If after an offer or invitation to which this section applies is sent to the persons to whom it is addressed, the offeror or the person on whose behalf the offer or invitation is made increases the amount of the price or other consideration offered, or the maximum price or the maximum amount of the consideration mentioned in the invitation, this section shall take effect as though the increased price or consideration had been specified in the original offer or invitation, and : —

(a) within two days after the increase is notified to any person to whom the original offer or invitation was addressed, written notification of the increase shall be sent by the offeror to every other such person, and a copy of the notification signed by the offeror and by every person on whose behalf the original offer or invitation was made shall be delivered to the Registrar for registration, and to the company in respect of whose shares or debentures the original offer or invitation was made ;

(b)   if a contract for the transfer of any shares or debentures has already been concluded in consequence of the original offer, the price or consideration to be paid or given for the shares or debentures under that contract shall be increased accordingly ;

(c)   any person who has made a tender to the offeror in response to the original invitation may withdraw his tender or submit a new tender.

(9) If the offeror makes a confirmation under subsection (5) in respect of less than all the shares or debentures specified in the list made under that subsection, the offeror shall be under an obligation to acquire from their respective holders a rateable proportion of all the shares or debentures in respect of which the offer made by the offeror has been accepted, or, in the case of an invitation made by the offeror in response to which more shares or debentures have been tendered at the same price, or for the same consideration, than the offeror is willing to acquire in accordance with the terms of the invitation, the offeror shall be under an obligation to acquire from their respective holders a rateable proportion of all the shares or debentures so tendered.

(10)  Sections 45, 46 and 50 shall apply to an offer or invitation to which this section applies as if it were a prospectus, as if the person, company or body corporate by or on behalf of whom the offer or invitation is made were persons authorising the issue of a prospectus, and as if the persons accepting the offer or invitation were persons who subscribed for shares or debentures under such a prospectus.

(11)  If an offer or invitation made under this section is a prospectus, the provisions of this Ordinance in respect of prospectuses shall apply in addition to the provisions of this section.

(12)  An application may be made to the court by any interested person for an order : —

(a) rectifying any statement in or omission frorn a declaration, list or confirmation made under subsection (5); or

(b)   declaring that the offeror or any person on whose behalf the offer or invitation is made is bound or entitled to acquire the shares or debentures of another person in consequence of the offer or invitation, and ordering the specific enforcement of any obligation to acquire or transfer such shares or debentures ; or

(c)   declaring that any shares or debentures are not affected by any obligation arising in consequence of the offer or invitation.

(13) It shall not be lawful for any person, company or body corporate to make an offer or invitation to which this section applies on behalf of a company if the offer or invitation relates to shares of that company.

(14) An offence punishable by a fine not exceeding ten thousand rupees or by imprisonment for not more than two years, or by both such fine and such imprisonment, is committed by : —

(a)   a person who sends out an offer or invitation to which this section applies if the offer or invitation does not contain the statements required by subsection (2); or

(b)   a person who sends out an offer or invitation to which this section applies, or any document which supplements such an offer or invitation, fails to deliver a copy thereof to the Registrar and to the company to who^e shares or debentures it relates in accordance with this section ; or

(c)   any person who knowingly makes or concurs in the making of a declaration, list or confirmation under subsection (5) which is false in a material particular, or which omits any matter which should be included therein, or who knowingly deliver or concurs in the delivery of a copy of such a document to the Registrar or to the company in respect of whose shares or debentures the offer or invitation was made ; or

(d)   a person who sends out an offer or invitation in contravention of subsection (13).

(15) The directors of a company who send or make a communication which falls within subsection (4) to any of the persons mentioned in that subsection without delivering a copy thereof to the Registrar in compliance with that subsection shall each be guilty of an offence punishable by a fine not exceeding one thousand rupees.

(16) This section shall not apply to an offer or invitation made before the coming into force of this Ordinance.

200.—(1) Where an offer, invitation, scheme or contract involving the transfer of the whole or part of the shares of any class of a company (in this section referred to as "the transferor company") to another company or body corporate, (in this section referred to as "the transferee company"), has within two months after the making of the offer that behalf by the transferee company been accepted or assented to by the holders of not less than nine tenths in value of the shares whose transfer is involved (other than shares already held at the date of the offer by, or by a nominee for, the transferee company or a company which belongs to the same group of companies as the transferee company), the transferee company may, at any time within two months after the expiration of the said two months, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares, and when such a notice is given the transferee company shall, unless, on the application made by the dissenting shareholder within two months from the date on which the notice was given, the court thinks fit to order otherwise, be entitled and bound to acquire those shares on, the terms on which, under the offer, invitation, scheme or contract, the shares of the approving shareholders are to. be transferred to the transferee company :

Provided that this subsection shall apply only if : —

(a)   the price or consideration to be paid or given under the offer, invitation, scheme or contract is the same for each of the shares to which the offer, invitation, scheme or contract relates;

(b)   the offer, invitation, scheme or contract does not provide for any payment of compensation for loss of office, or as consideration for or in connection with retirement from office, for which the approval of a general meeting or of a meeting of a class of shareholders is required by sections 174 175 or 176; and

(c) the offer, invitation, scheme or contract provides that any shareholder who wishes to do so may, instead of accepting a consideration other than cash for the transfer of his shares, require the transferee to pay to him a specified price in cash.

(2) Where, in pursuance of any such offer, invitation, Scheme or contract as aforesaid, shares of any class of a company are transferred to another company or body corporate or its nominee, and those shares, together with any other shares of the same class held by, or by a nominee for, the transferee company or a company which belongs to the same group of companies as the transferee company at the date of the transfer, comprise or include nine tenths in value of the issued and outstanding shares of that class, then—

(a)   the transferee company shall within two months from the date of the transfer (unless on a previous transfer in pursuance of the offer, invitation, scheme or contract it has already complied with this requirement) give notice of that fact in the prescribed manner to the holders of the remaining shares of that class who have not accepted or assented to the offer, invitation, scheme or contract; and

(b)   any such holder may within two months from the giving of the -notice to him require the transferee company to acquire the shares in question:

and where a shareholder gives notice under paragraph (b) of this subsection with respect to any shares, the transferee company shall be entitled and bound to acquire those shares on the terms on which under the offer, invitation, scheme or contract the shares of the approving shareholders were transferred to it, or on such other terms as may be agreed or as the court, on the applicaton of either the transferee company or the shareholder, thinks fit to order.

(3) Where a notice has been given by the transferee company under subsection (1) of this section and the court has not, on an application made by the dissenting shareholder, ordered to the contrary, the transferee company shall, on the expiration of two months from the date on which the notice has been given, or, if an application to the court by the dissenting shareholder is then pending, after that application has been disposed of, transmit a copy of the notice to the transferor company together with an instrument of transfer executed on behalf of the shareholder and on its own behalf by the transferee company, and pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which by virtue of this section that company is entitled to acquire, and the transferor company shall thereupon register the transferee company as the holder of those shares :

Provided that an instrument of transfer shall not be required for any share for which a bearer share certificate is for the time being outstanding.

(4) Any sums received by the transferor company under this section shall be paid into a separate bank account, and any such sums and any other consideration so received shall be held by that company on behalf of the several persons entitled to the shares in respect of which the said sums or other consideration were respectively received.

(5) In this section the expression "dissenting shareholder" includes a shareholder who has not accepted or assented to the offer, invitation, scheme or contract and any shareholder who has failed to transfer his shares to the transferee company in accordance with the terms of the offer, invitation, scheme or contract.