Takeover panel may submit report to Sebi this month

The much-awaited report of a panel appointed by the Securities and Exchange Board of India (Sebi) on revising the takeover code is set to be submitted to the market regulator this month.

The Takeover Regulation Advisory Committee (TRAC) was set up in September last year.

“The report is in its final stage. Barring a few issues, on which discussions are on, the committee is ready to submit the report to the market regulator within three weeks,” said six people familiar with the development. They, however, did not disclose the key recommendations, saying the report was sensitive.

“What I can say is that it’s an exhaustive and detailed report. Once submitted, the recommendations will be available on Sebi’s website for public comments,” said a member of the committee.

This is the second review of takeover regulations by Sebi after the takeover code was introduced in 1997. The last review was in 2002, when Sebi brought in greater disclosures of holdings at every stage and exempted preferential issues from the purview of the code.

A top Sebi official said, “The takeover code will be one of the major areas of reforms for Sebi in the current financial year.” He added the report was expected soon and would be put on the regulator’s website for public comments before a final decision was taken.

A rise in mergers and acquisitions (M&As) during the decade and complexities arising out of such deals have made it necessary to re-assess the code, say M&A experts.

Committee members whom Business Standard had earlier spoken to said that rising M&As had revealed several loopholes in the system. “These need to be plugged,” a member had said.

They also said that in several cases, promoters got all the benefits at the cost of small shareholders. The members said the level of purchase that triggered an open offer (which is 15 per cent) should be on the higher side.

Moreover, the committee members had expressed reservations over non-compete fees which an acquirer pays to the seller company to keep other potential buyers at bay.