The Securities and Exchange Board of India (Sebi) takeover panel will hold discussions with financial institutions (FIs) on the issue of bringing them under the purview of the Takeover Code. The panel will hold a meeting on November 14.
The leading institutions invited for the meeting are the Industrial Development Bank of India, ICICI Ltd, Unit Trust of India, IFCI Ltd, Life Insurance Corporation and General Insurance Corporation.
At present, FIs are not covered by the code both as acquirers and as pledgees. Though institutions have large chunks of holding in companies, they are perceived as passive investors.
However, the role of institutions have changed over the years and of late they are playing a decisive role in shaping coporate decisions.
There were some instances where institutions had jointly taken a stand on changing the composition of a company board and appointments for top posts.
Sebi wanted the takeover committee to look into the issue in light of the recent cases where FIs had jointly taken a stand in supporting existing managements.
"We want to take their views before making any changes in the takeover code and want to examine whether there is any anomaly," senior Sebi officials said.
The committee, which will be meeting on November 13 and 14, will also take stock of the recent spate of corporate raids like in Bombay Dyeing and Gesco Corporation. It is also planning to fine tune the process of filing of information by acquirers as there were complaints relating to this.
The committee is meeting in the backdrop of the recent hostile takeover bids and how the regulations can be tightened. Sebi wants to ensure that there is level playing field for both the existing management and the predator company.
The committee will examine whether there should be any change in creeping acquisition limit. Under the present regulations, hostile takeovers have so far not been very successful with only one case where there was a change in management.
Meanwhile, Sebi officials said that the market regulator is not calling any companies involved in hostile takeovers in the recent past to attend the Bhagwati panel meeting as was reported in a section of the media.
