The Securities and Exchange Board of India (Sebi) has decided to review the take over code. The committee headed by Justice P N Bhagwati reassembled at the Securities and Exchange Board of India (Sebi) offices yesterday and discussed the various issues which have come up during the implementation of the takeover code.
DR Mehta, chairman, Sebi said that no final decisions on any changes have been taken. "We have decided to review the code because it is almost 15 months since the code was pased and 57 cases have been dealt with since then," Mehta added.
"There are some ambigious issues like whether a conditional offer of less than 20 per cent is possible. Some part of the code allows it, but other do not. We have decided to sort out these issues," said the Sebi chairman.
The issues that have been raised and kept before the panel include consolidation of holdings, applicability of the regulations and clarity on various definitions.
The committee has decided to send a detailed questionaire to the prominent chambers of commerce, merchant bankers, investor associations among others seeking their views on various takeover issues. These responses will be placed before the committee's next meeting which has been scheduled in August.
Perturbed by the confusion created by Dhoot's decison to acquire 2 per cent stake in Videocon International's, the panel has decided to review the creeping acquisition code. The committee has decided to take a re-look on the creeping acquisition. It has asked whether creeping aquisition limit should be raised from the current 2 per cent.
The panel has sought suggestions on whether the persons in control be allowed to consolidate beyond 2 per cent limit through open offers without the requirement of a minimum offer of 20 per cent.
The panel has questioned the conditional offer and asked whether a conditional offer can be made for less than 20 per cent. It has also raised the issue of whether an acquirer can make an offer conditional as to acceptances, when he is obligated to make a minimum offer of 20 per cent. Further, the panel has asked whether there should be a distinction between obligated offers and non-obligated offers and minimum offer size only for obligated offers.
The panel has also decided to take a re-look at the provision relating to revision in offer price vis-a-vis the market purchases. On the exchange of shares the panel has asked what measures should be taken when a listed company makes an offer to take over another company through exchange of shares. It has further asked what precautions needs to be taken to ensure that the interest of shareholders of both the companies are protected. The panel has also sought suggestions where the shareholders of the acquirer company do not approve of the deal. It has asked whether the shareholders approval be taken akin to statutory approvals and the offer be allowed to be withdrawn if this does not come.
The issue of preferential allotments has also been raised by the panel. The panel has asked for clarity on several issues including the board resolution should be sent to the stock exchanges. Should it be the one before the EGM in which the decision to call the EGM for purposes of passing the resolution or the one after the EGM which decided about the issue and allotment. Among those who attended the meeting included Nimesh Kampani, Vallabh Bhansali, Shitin Desai, M G Damani among others.
