THE ETERNAL CONUNDRUM OF A SPOTLESS PAC
Smita Sharma February 9, 2009
SPOTLESS PAC!! OK, that does not really make sense, but just because I really liked the movie Eternal Sunshine of a Spotless Mind, I was inspired to title my blog along the same lines.
OK, now I better stop thinking how flawless the script was and move on to the real issue before I get barred from writing any further blogs.
During one of my recent transactions, I spent a substantial amount of time understanding the concept of a person acting in concert (“PAC”) and a deemed PAC and here I am, summarizing my conclusion on the same. PAC has been defined under Regulation 2(1)(e) of the SEBI (Substantial Acquisition of shares and Takeovers) Regulations, 1997 and is divided into two parts: (i) the first part gives a general definition of the PAC, as per which two persons should share a common intention of the substantial acquisition of shares or voting rights or gaining control over the target company to be called PAC. Such intention can be achieved pursuant to an agreement or understanding, which can be either formal or informal (“Part 1”); and (ii) the second part is a deeming provision wherein certain categories of persons are deemed to be acting in concert (“Part 2”). However, the definition of “deemed to be persons acting in concert” would apply without any prejudice to the generality of Part 1 of this definition.
Accordingly, Part 2 of the definition merely creates a presumption which is rebuttable on the ground that such person does not intend to acquire any shares/voting rights/control of the target company. Therefore, if two persons do not share a common intention of substantial acquisition of shares or voting rights or acquisition of control, they will not be treated as a PAC even if they fall in the deemed categories listed out in Part 2 of the definition.
Suddenly my memory is disappearing and I just hope my analysis on PAC provides some perspective to the readers at the end of it all just like the way Mary provides it to Clementine and Joel. BTW, before I sign off, I MUST say: Charlie Kaufman is incredible!!!
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