Takeover norms are are set to get a makeover.
The Securities and Exchange Board of India (Sebi) has already kick-started the process in consultation with the industry.
“When the takeover norms changed a year-and-a-half back, we had told the stakeholders that a revision will be done after a year. The time is due now. In the next couple of months, we will be making further progress on this front,” Sebi chairman U K Sinha (pictured) said on the sidelines of FPSB’s financial planning congress.
Sebi had modified the rules for takeover of companies in July 2011. As per the changes, any entity buying 25% stake in a listed firm would need to make a mandatory offer to buy an additional 26% from public shareholders. Sebi had also raised the open offer size for public shareholders to 20% from 15%.
The regulator has since received feedback from the industry on tweaking the norms.
“We need to strike a balance between the needs of the industry and the end customer. Hence we need to change the regulations more often to ensure that it suits for a dynamic environment,” said Sinha.
On Sahara case
The market regulator has put the process of installing an in-person verification (IPV) agency on the back burner. Introduction of an IPV is to ensure the genuineness of bondholders in the Sahara case.
The Supreme Court had in August last year asked two Sahara group companies – Sahara Housing Investment Corporation Ltd and Sahara Real Estate Corporation Ltd – to refund the money they had raised from some three crore investors through optionally fully convertible debentures with 15% interest. Sebi was asked to facilitate the refunds.
Subsequently, Sebi had sought applications from public sector banks and know-your-customer registration agencies, or KRAs, for appointment of an IPV, which could interact face to face with the bondholders for testing their genuineness.
But on Wednesday, Sebi withheld the process saying it was not happy with the entities which have shown interest.
“We will wait till good and reliable agencies come forward. We do not have confidence in the agencies that have approached us so far,” said Sinha.
On suspension of Deccan Chronicle by NSE
Asked for a reaction on suspension of trading in Deccan Chronicle shares by the National Stock Exchange (NSE) for non-disclosure of results and shareholding pattern data, the Sebi chairman said, “Stock exchanges have their own norms and rules. It has been done keeping in mind that perhaps, if the trading is allowed, it may harm the small investors.”
“How long this suspension should continue, what further measures should be taken – it will depend on different cases. So, it can be a case-to-case approach rather than one general approach. But the underlying idea has to be how we safeguard the interests of small investors,” said Sinha.