They have also pointed out that while Sterlite's change of instrument may be permissible under the code, SEBI should insist that the company makes the same kind of disclosures to investors about its activities at it would in the event of making a public issue.

According to Cyril Shroff, noted solicitor, even though the takeover code does not specifically mention whether or not a negotiated deal and a subsequent offer to other shareholders can be made at a higher price even after the last date for revision of offer, sections 25 (6), 22 (17) and 20 (iv), when studied in harmony make it clear that a negotiated deal can take place but not at a price higher than the offer price.

"A study of these sections reveals that a negotiated deal can be made during the offer period, and the priceat which this deal is concluded will be offered to all shareholders. At the same time, the code also says that the last day for revising the price is seven days before the closure of the offer. Looking at these sections in harmony it is clear that while a negotiated deal can take place it can't be done so at a higher price", said Shroff.

This is one of the routes that Alcan had considered to offer a higher price to Indal shareholders, following the steep revision of Sterlite's offer price. It is also reported that institutions are waiting for this revision of price before deciding which way they would go. As regards, the issue of Sterlite offering a new instrument, experts feel that while it may not be improper for Sterlite to offer its shares rather than cash, what is imperative is that it makes disclosures about the company to all shareholders of Indal.

"Disclosures of the kind that Sterlite would have had to make through a public issue need to be made to the Indal shareholders. After all theshareholder must be informed about the financials of the company whose shares he is being offered", said a legal expert at a leading investment bank, on condition of anonymity.

Shroff agrees and says that disclosures about the company would be made in the event of a company offering its shares rather than cash, which it was earlier doing. It is learnt that SEBI is looking at these and several other issues following a clutch of issues raised by both Alcan and Sterlite. The regulator is yet to take a formal stand on the issue. Its problems have been compounded owing to the absence of the SEBI chairman and the concerned executive director, both of whom are abroad.