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Parul Monga and Vivek Law
Mumbai, Sept 22: Sebi has expressed opposition to any further widening of the role of the P N Bhagwati panel on takeovers. Cases where exemption from the takeover code has been sought are often referred to the panel for its advice and at Tuesday's meeting, some merchant bankers said that the role of the committee should be expanded.
Their point was that several issues of legal interpretation could also be referred to the panel. Sebi sources, however, said that the regulator is of the view that as a statutory authority there is a limit to which it can ask an outside agency to look into cases.
``Do the income tax authorities ask external consultants for their advise before they give a verdict. Sebi is the designated authority and has the jurisdiction to give its orders. "It would not be proper for it to keep seeking advise from a takeover panel,'' said a source on condition of anonymity.
The issue was discussed extensively at the meeting. No consensus could be reached on the issue. Justice P N Bhagwatisaid that the next meeting would be scheduled for October 5 and October 6 and a consensus is expected to be reached on the changes that are sought to be made in the takeover code.
The meeting was attended by Sebi chairman, D R Mehta. The revised takeover code is likely to hike the creeping acquisition limit to five per cent from the current two per cent. Under the existing takeover code, promoters are allowed to consolidate their holdings in the company by two per cent without triggering the takeover code.
The takeover committee is also considering the possibility of reducing the open offer size to 10 per cent from the current 20 per cent in cases where a promoter holds more than 50 per cent stake in a company. Under the existing code, if the promoter wants to increase his stake from 51 per cent to 56 per cent, he has to make an open offer for an additional 20 per cent stake.
The committee is also trying to fine tune the definition of management control. The question of the change in management from ajoint control to a sole control is also under committee's review. One of the suggestions before the panel is that in case if the partners acquires the stake from the other at a price higher than the market price, the former should make an open offer to the public. There are some doubts about the issue of shares after an open offer has been made to the public.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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