Press Esc to close
Wednesday 30 July 2014
News updated at 8:01 PM IST
Weather
Max: 0°C
Min : 0°C
In Bangalore
Sunny day

Takeover norms in play

Mumbai, Sep 23, DHNS:

Market makeover: Open offer trigger fixed at 25%

The market regulator, Securities & Exchange Board of India (Sebi), on Friday, notified new takeover rule under which any company buying 25 per cent stake in a listed firm will have to mandatorily make an open offer to buy an additional 26 per cent shares from public.

The new regulations, titled as ‘The Sebi (Substantial Acquisition of Shares & Takeovers) Regulations, 2011,” will come into effect from the next month, it said.

Also, the new guidelines mark an increase in the open offer size for public shareholders from 20 per cent at present. Also the trigger for making such an offer has been raised from 15 per cent under the existing regulations.

In a notification issued, Sebi said: “No acquirer shall acquire shares in a target company which taken together with shares or voting rights held by him... entitle them to exercise 25 per cent or more of the voting rights..., unless the acquirer makes a public announcement of an open offer.”


Under the new rules, there would be no separate provision for non-compete fees, which allows promoters to higher price than the public shareholders, and all shareholders should be given the exit option at the same price. Partly accepting the recommendations of a Sebi-appointed panel on the matter, the regulator also decided to abolish the non-compete fees that acquirers generally pay to the sellers in merger and acquisition deals.

As part of the new code, Sebi allowed voluntary offers subject to certain conditions. Regarding control and offer size, Sebi said that the existing definition of control would be retained and the minimum offer size shall be increased to 26 per cent of the target company.

The notification follows the decision taken at Sebi's board meeting in July.  A Sebi panel on new takeover regulation had recommended last year an open offer for buying up to 100 per cent in the target company, while suggesting an increase in the trigger limit to 25 per cent.

While the recommendation on trigger was accepted, the suggestion for offer size has been kept lower due to intense opposition from industry and other market participants. The panel had opined against non-compete fees for promoters which often worked out as high as 25 per cent of deal value.

Go to Top

Photo Gallery
Siddaramaiah at the launch of a drinking water unit in Vidhan Soudha premises in Bengaluru ...

Siddaramaiah at the launch of a drinking water unit in Vidhan Soudha premises in Bengaluru ...

Over forty houses were buried in a landslide triggered by heavy rains at Malin village in Pune ...

Over forty houses were buried in a landslide triggered by heavy rains at Malin village in Pune ...

Angry people set ablaze a police motorbike after rape of a minor girl by a prisoner in Allahabad ..

Angry people set ablaze a police motorbike after rape of a minor girl by a prisoner in Allahabad ..

Peoples Movement Against Nuclear Energy (PMANE) leader SP Udayakumar addressing the media ...

Peoples Movement Against Nuclear Energy (PMANE) leader SP Udayakumar addressing the media ...

India's Bajrang wrestles with England's Sasha Madyarchyk during the Men's Freestyle Wrestling ...

India's Bajrang wrestles with England's Sasha Madyarchyk during the Men's Freestyle Wrestling ...

Pankaj Singh fails to make contact with a delivery during the fourth day of the third test ...

Pankaj Singh fails to make contact with a delivery during the fourth day of the third test ...

Mahendra Singh Dhoni follows through on a shot after failing to make contact with the ball ...

Mahendra Singh Dhoni follows through on a shot after failing to make contact with the ball ...

Sushil Kumar of India, right, wrestles with Qamar Abbas of Pakistan in a FS 74kg gold ...

Sushil Kumar of India, right, wrestles with Qamar Abbas of Pakistan in a FS 74kg gold ...

Nigeria's Melvin Bibo (L) competes with India's Sushil Kumar (R) at the Men's Freestyle...

Nigeria's Melvin Bibo (L) competes with India's Sushil Kumar (R) at the Men's Freestyle...

India's wrestling medalists Sushil Kumar, left with gold, Vinesh, second left with gold...

India's wrestling medalists Sushil Kumar, left with gold, Vinesh, second left with gold...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bangalore - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523