Very Urgent help_SAST
This query is : Resolved
17 January 2011
Dear All,
My Qs. is as follows:-
A is a pvt. ltd company and is a promoter of C, a listed company.
A's holding in C is 56.19% in equity shares and 40.65% in pref shares.
A, now again acquires pref shares of C (of 18.536%) from B, a pvt ltd company, from whom it has earlier taken pref shares of 40.65%.
What is the procedure to be followed in SAST & Insider Trading? What are the forms to be filled with stock exchange??
Thanking U all in advance
My Qs. is as follows:-
A is a pvt. ltd company and is a promoter of C, a listed company.
A's holding in C is 56.19% in equity shares and 40.65% in pref shares.
A, now again acquires pref shares of C (of 18.536%) from B, a pvt ltd company, from whom it has earlier taken pref shares of 40.65%.
What is the procedure to be followed in SAST & Insider Trading? What are the forms to be filled with stock exchange??
Thanking U all in advance
03 August 2025
Your question involves **Takeover Regulations** (SAST) and **Insider Trading Regulations** under SEBI, related to the acquisition of **preference shares** by a promoter company (Company A) in a listed company (Company C). Here's a clear breakdown:
---
### 🧾 Basic Facts:
* Company A is a **promoter** of Company C (listed entity).
* Company A holds:
* **56.19% in equity shares** (i.e., voting capital).
* **40.65% in preference shares** (usually non-voting unless specified).
* Company A is acquiring an additional **18.536% preference shares** from Company B (another private company).
---
## ✅ Applicability of **SAST Regulations (SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011)**
### ✔️ Key Concept:
SAST is **triggered based on acquisition of *voting rights*** — not *non-voting securities* like most preference shares (unless converted or carry voting rights).
### 🔍 In your case:
* Preference shares are being acquired.
* If these **do not carry voting rights** (as is typical), then:
✅ **SAST is *not applicable***.
But:
* If the **preference shares are convertible**, or
* They **carry voting rights** under specific conditions (e.g., dividend not paid for two years), then:
⚠️ **SAST provisions may apply**, as voting rights are impacted.
### 📌 If preference shares are **convertible**:
* Then, under Regulation 3(1), even acquisition of convertible instruments may trigger SAST.
* Disclosures under **Regulation 29** must be made.
---
## ✅ Applicability of **SEBI (Prohibition of Insider Trading) Regulations, 2015**
* Since Company A is a **promoter** of a listed company (C), and the transaction involves **shares of the listed company**, **insider trading provisions will apply**.
* Even though the securities are **preference shares**, if they are **convertible into equity** or affect the price of listed equity, **trading window norms and disclosure obligations** apply.
### Disclosures to be made:
Under **Regulation 7(2)** of Insider Trading Regulations:
* Any promoter acquiring or disposing of securities (including convertible instruments) **in excess of ₹10 lakhs in a calendar quarter** must disclose the transaction to:
* The **Company**, and
* The **Stock Exchange** where the company is listed.
### Timeline:
* Disclosures must be made **within 2 working days** of the transaction.
---
## ✅ Required Disclosures (Forms to be filed)
| Form | Regulation | Purpose |
| --------------------------------------- | ------------- | ------------------------------------------------------------------------------------ |
| **Form C** | PIT Reg. 7(2) | Disclosure by promoter for acquisition/disposal of securities if value > ₹10 lakhs |
| **Form 29(1) or 29(2)** (if applicable) | SAST Reg. 29 | Disclosure if voting rights change (not usually applicable to non-convertible prefs) |
| **Form MGT-4 & MGT-5** | Companies Act | If declaration of beneficial ownership is involved |
---
## ✅ What to Check Immediately:
1. **Are the preference shares convertible into equity?**
2. **Do they carry voting rights under any conditions?**
3. **Was the consideration > ₹10 lakhs?** (PIT disclosure trigger)
If **yes** to any of these, disclosures under **SAST and PIT** apply.
---
### 📌 Suggested Action Steps:
1. **Check terms of preference shares** (convertible or not).
2. **Calculate voting rights impact** (if any).
3. **File Form C under PIT** if value exceeds ₹10 lakhs.
4. **File disclosure under Regulation 29** (if voting rights impacted).
5. **Update company records** and **stock exchange**, if applicable.
---
Let me know if you need:
* A **template of Form C or Form 29(1)/29(2)**,
* Guidance on drafting the disclosure,
* Or a legal note explaining why SAST is/isn’t triggered in your specific case.
I can help prepare it quickly.
---
### 🧾 Basic Facts:
* Company A is a **promoter** of Company C (listed entity).
* Company A holds:
* **56.19% in equity shares** (i.e., voting capital).
* **40.65% in preference shares** (usually non-voting unless specified).
* Company A is acquiring an additional **18.536% preference shares** from Company B (another private company).
---
## ✅ Applicability of **SAST Regulations (SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011)**
### ✔️ Key Concept:
SAST is **triggered based on acquisition of *voting rights*** — not *non-voting securities* like most preference shares (unless converted or carry voting rights).
### 🔍 In your case:
* Preference shares are being acquired.
* If these **do not carry voting rights** (as is typical), then:
✅ **SAST is *not applicable***.
But:
* If the **preference shares are convertible**, or
* They **carry voting rights** under specific conditions (e.g., dividend not paid for two years), then:
⚠️ **SAST provisions may apply**, as voting rights are impacted.
### 📌 If preference shares are **convertible**:
* Then, under Regulation 3(1), even acquisition of convertible instruments may trigger SAST.
* Disclosures under **Regulation 29** must be made.
---
## ✅ Applicability of **SEBI (Prohibition of Insider Trading) Regulations, 2015**
* Since Company A is a **promoter** of a listed company (C), and the transaction involves **shares of the listed company**, **insider trading provisions will apply**.
* Even though the securities are **preference shares**, if they are **convertible into equity** or affect the price of listed equity, **trading window norms and disclosure obligations** apply.
### Disclosures to be made:
Under **Regulation 7(2)** of Insider Trading Regulations:
* Any promoter acquiring or disposing of securities (including convertible instruments) **in excess of ₹10 lakhs in a calendar quarter** must disclose the transaction to:
* The **Company**, and
* The **Stock Exchange** where the company is listed.
### Timeline:
* Disclosures must be made **within 2 working days** of the transaction.
---
## ✅ Required Disclosures (Forms to be filed)
| Form | Regulation | Purpose |
| --------------------------------------- | ------------- | ------------------------------------------------------------------------------------ |
| **Form C** | PIT Reg. 7(2) | Disclosure by promoter for acquisition/disposal of securities if value > ₹10 lakhs |
| **Form 29(1) or 29(2)** (if applicable) | SAST Reg. 29 | Disclosure if voting rights change (not usually applicable to non-convertible prefs) |
| **Form MGT-4 & MGT-5** | Companies Act | If declaration of beneficial ownership is involved |
---
## ✅ What to Check Immediately:
1. **Are the preference shares convertible into equity?**
2. **Do they carry voting rights under any conditions?**
3. **Was the consideration > ₹10 lakhs?** (PIT disclosure trigger)
If **yes** to any of these, disclosures under **SAST and PIT** apply.
---
### 📌 Suggested Action Steps:
1. **Check terms of preference shares** (convertible or not).
2. **Calculate voting rights impact** (if any).
3. **File Form C under PIT** if value exceeds ₹10 lakhs.
4. **File disclosure under Regulation 29** (if voting rights impacted).
5. **Update company records** and **stock exchange**, if applicable.
---
Let me know if you need:
* A **template of Form C or Form 29(1)/29(2)**,
* Guidance on drafting the disclosure,
* Or a legal note explaining why SAST is/isn’t triggered in your specific case.
I can help prepare it quickly.
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