Recently, the Security and Exchange Board of India, SEBI, made amendments to the takeover code.

 

What are the changed introduced?

  • The amendments to the SEBI (substantial acquisition of shares and takeover) Regulations were notified recently.
  • The board has gone away with the rule that used to link open price offer to the last 60 daystrading volume.
  • Post the latest change in Takeover Code, acquirers would enjoy flexibility in pricing their open offers for minority shareholders and not be required to calculate the open offer price linked to 60 days volume weighted average market price (VWAMP) prior to the date of public announcement.
  • The earlier requirement of calculating 60 days VWAMP for determination of open offer price in case of disinvestment of PSU Companies, wherein it results in its change in control, has been dispensed with.
  • The change has been made to ease strategic investments in public sector units for the Central and State governments.
  • Ease of Business —
    • Acquirers would enjoy flexibility in pricing their open offers for minority shareholders
    • Offers level playing field with private sector
    • Provides a financial certainty to strategic investors
    • Will boost transparency in disinvestments

 

About SEBI –

  • The regulator of Indian stock market, set up under the Security and Exchange Board of India Act, 1992 (as a non-statutory body set on 12 April, 1988 through a government resolution in an effort to give the Indian stock market an organised structure) with its head office in Mumbai.
  • The Board of SEBI comprises nine members excluding the chairman—one member each from the Ministries of Finance and Law, one member from the RBI and two other members appointed by the central government. It has four full-time members (including the chairman).
  • Functions of SEBI – Main functions/powers of the Board as per the SEBI Act, 1992 are –
      • Registering and stock exchanges, merchant banks, mutual funds, underwriters, registrars to the issues, brokers, sub-brokers, transfer agents and others.
      • Levying various fees and other charges (as 1 percent of the issue amount of every company issuing shares are kept by it as a caution money in the concerned stock exchange where the company is enlisted).
      • Promoting investor education.
      • Inspection and audit of stock exchanges and various intermediaries.
      • Performing other concerned functions as may be prescribed from time to time.