Investors' body seeks listing norms change for M&As

The National Investors Foundation (NIF) has sought a change in the listing agreement of the Securities & Exchange Board of India (Sebi) so that it could offer a better deal to the shareholders of the merged company in case of merger and amalgamations (M&A).

The NIF has pointed out that the shareholders of the merged outfit suffer due to delay in listing of the newly issued shares. The foundation has given a presentation to Prateep Kar, executive director (secondary markets) of the regulator, on April 21 in this regard.

The NIF has argued that generally the shareholders of transferor company receive shares of the transferee company and trading in the shares of transferor company stops.

But generally there is a huge gap in the period that trading in the shares of the transferor company stops and the shares of the transferee company are allotted to the shareholders of the merged company.

"The delay is anywhere between 4 to 10 weeks as evident in the case of the merger of Vardhaman Spinning and Mahavir Spinning, Burroughs Welcome and Glaxo, JVSL and Jindal Iron etc," the presentation says.

The foundation has suggested that the Sebi should take appropriate steps to stop trading in the shares of both the companies in case of merger by changing the listing agreement.

Apart from stopping the trading, it has given an alternative suggestion which allows trading even in the shares of the merged company during the interim period in a manner that reflects the swap ratio of the merger.