New takeover rules by year-end: Sebi

Addressing the Bangalore Chamber of Industry & Commerce, he said the proposals have elicited good response from the various stakeholders since its announcement in July 2010. He exhorted the BCIC members to send in their reviews and suggestions stating Sebi would look into them and come up with clarifications if needed later on, at the half-day interaction organised by BCIC jointly with Institute of Company Secretaries of India, Bangalore chapter.

Sebi, he said, was likely to announce the new takeover rules by the year-end. There are various process involved, including tabulating suggestions, internal discussion and evaluating pros and cons in arriving at the new rule. “We have even given the format.

Everything is ready, now only some sort of tinkering is required,” he said. Once the new rules are in place, this, he conceded that costs of merger and acquisition would go up. On fears expressed over transfer of natural resources or assets into foreign hands and tendencies to block mega deals he said, “Sebi as a regulator can always stop if a takeover is not in the interest of the shareholders.” The scope of a takeover regulation is only related to acquisition of shares and controls.

On whether the scope could be extended to unlisted companies as many big IT firms were taking over small unlisted companies, he said, “Unlisted companies were out of the radar of Sebi. It will never happen unless there is an indirect takeover. If you are acquiring A company and as a result of the acquisition you acquire B company and if it is listed than A company’s acquisition will come under it.”

He disagreed that the code would prove advantageous to foreign acquirer because of access to funds. “Let us not look that way because there may be people in India also with sufficient funds. Here also there are capable people to takeover a company,” he said.

On funding constraint, he said, “Funds are available but because of sensitivity of the matter at the initial stages nobody would like to go to the private fund provider, then it will be known, it is sensitive and markets will be unnecessarily affected that is the fear,” he said.