Pritish Nandy Communications Ltd. (PNCL) – June 19, 2025
Fact of the case:
In March 2025, Ideas.Com India Pvt. Ltd. (“Acquirer”), a part of the promoter group of Pritish Nandy Communications Ltd. (the “Target Company”), which is a listed entity, purchased a total of 7,05,000 shares which is equivalent of to 4.87% of the Target Company’s equity across three trades executed on March 26, 27, and 28, 2025. Notably, due to intervening trading holidays, the shares acquired in the March 28 trade were credited to the Acquirer’s demat account only on April 2, 2025, resulting in this particular acquisition being reflected in the next financial year.
Anamoly Raised : Regulatory ambiguity over whether “acquisition” for the 5% creeping acquisition limit under Regulation 3(2) of SEBI SAST Regulations is recognized at the time the trade is executed (order placement) or at the time shares are credited to the acquirer’s demat account (i.e., legal ownership and transfer).
SEBI’s Reply:
- The terms “acquire” and “acquisition” under the SAST Regulations include not just physical receipt, but also the agreement or intention to acquire shares or voting rights.
- For the purpose of Regulation 3(2) (5% creeping acquisition limit):
- The relevant financial year for reckoning the acquisition is the year in which the purchase order is placed and trade is executed (contracted), not when shares are credited.
- The intention and act of executing a trade (order placement) are determinative, not the actual credit date in demat.
- Interpretation of this guidance vs Regulation 13 of SAST
If someone wants to acquire more than 5% of the shares in a listed company, then the requirement to make a public open offer gets triggered on the day the acquisition is agreed to or when the purchase order is placed and not when the shares actually get credited to the acquirer’s demat account. This means that for compliance purposes under Regulation 13(1) of the SAST Regulations, the focus should be on when the contract or trade is made, not when the shares show up in the demat account. SEBI’s informal guidance also explains that the acquisition, for these threshold rules, is counted in the same financial year when the buying decision and trade is executed, rather than when the shares are credited after settlement. So basically, the open offer needs to be made at the time of contracting the acquisition, and not when the shares reflect in your demat account.
Conclusion:
- SEBI has interpreted the terms “acquirer” and “acquisition” under SAST Regulation 3(2) as not the completion of acquisition of shares or voting rights but the intention of such acquisition.