Takeover Code

Press-note 3 requires that all investments from entities will have to be made under the 'approval route' and will require security clearance

In order to align the practices, Sebi on Wednesday asked depositories and exchanges to use the new procedure of capturing the PAN of the promoters from listed companies for disclosures under the takeover norms also. Earlier this month, the regulator put in place a detailed procedure for system-driven disclosures under the PIT (Prohibition of Insider Trading) Regulations. This system-driven disclosures will pertain to trading in equity shares and equity derivative instruments -- futures and options -- of the listed company by such entities. The new framework required that the capture of the Permanent Account Number (PAN) of the entities be done from the listed company itself, rather than through the registrar and share transfer agents (RTAs). In order to align the practices, it has been decided to use the procedure of capturing the PAN of the promoters from listed companies as stipulated by the regulator earlier this month for SAST (Substantial Acquisition of Shares and Takeover) no

According to legal experts, a takeover is when a non-controlling shareholder takes control and a squeeze-out is when a controlling shareholder squeezes out minority shareholders

Analysts say rules may have a bearing on Tata Sons in midst of battle with its ex-chairman Mistry

Proposed norms are in the right direction

The provision should benefit minority shareholders as long as there is no compulsory acquisition of shares of the minority, say legal experts

Unlisted companies have no formal takeover code and shares are transferred on the basis of contracts and agreements

Going only by numerical threshold could create further ambiguities in determinig control definition in takeover code, they argue