A twelve member panel of SEBI headed by C Achuthan and industry veterans like YM Deosthalee and Koushik Chatterjee on Monday submitted a fresh set of recommendations for takeovers including increasing the trigger limit for takeovers.
The panel has recommended sweeping changes to the country's takeover code, including raising the open offer trigger to 25 per cent from 15 per cent to prevent hostile takeovers and the open offer price will based on a 52-week average of the stock price.
NDTV Profit broke the takeover code story on Friday.
The takeover committee has also proposed to make it mandatory for the acquirer to make an offer for up to 100 per cent in the company – a move that will raise the cost for acquisition, but ensure that all shareholders especially retail investors participate in the open offer.
Among other recommendations is a cap of 10-75 per cent for voluntary offers from existing stake holders and to do away with non-compete fee – an attempt to bring more transparency since promoters of a target company will no longer get huge sums of money from the acquirer for not entering the same trade. The timeline of an open offer is also set to reduce to 57 days.
The panel also recommended that the offer price would be based on the volume weighted average of 12 weeks market price of the target company, against 26 weeks now.
Last September, the SEBI formed the Takeover Regulation Advisory Committee to review the takeover rules and make them more relevant. SEBI had last reviewed the code in 2002.
"These regulations will serve the capital markets for the next five to ten years," said CB Bhave, chairman of SEBI.
"An open offer ought to be for all shares of the target company to ensure equality of opportunity and fair treatment of all shareholders, big and small," C Achuthan, chairman of SEBI's Takeover Panel, said.
Most corporates have welcomed the move.
But there are worries too with takeovers getting more expensive. It remains to be seen what impact it will have on the size of takeovers in the country. Also, the cap for voluntary offers has been set at just 10 per cent and will this leave more room for manipulations? But members of the panel say these concerns have been addressed.
The final guidelines however are still a few months away. The recommendations of the takeover panel are open for public feedback till August 31 and only then will market regulator SEBI take a final call. However, looking at the representation that the committee has from SEBI, not much is likely to change.
Read more at: http://beta.profit.ndtv.com/news/show/sebi-panel-calls-for-sweeping-changes-in-takeover-norms-83392?cp
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