These members, which includes top merchant bankers, have during the committee's deliberations stressed that hiking the limit would lead to a virtual "green mail"-like situation. This is because the Companies Act provides for rights against oppression to a minority shareholder in the event of him holding more than 10 per cent stake.

This provision enables a shareholder to take a company to the Company Law Board on any decision of the company by which the minority shareholder feels aggrieved.

"Since the takeover code used to be triggered at 10 per cent, we never had the instance of someone taking a 10 per cent stake and making life miserable forthe company, as the minute he touched this mark, he would need to make an open offer, which means an investor would go up to 10 per cent only if he was serious about taking over the company. What will happen now is that a vested interest will pick up over 10 per cent stake and keep black-mailing the company as he would not be required to make an open offer. This is what happened in the USA, thus the term green mail. We have sowed the seeds for the same here," said a top merchant banker of the committee.

These merchant bankers told The Financial Express that with more than 10 per cent the "minority" shareholder can also seek a slot on the company board.

"We will have promoters being forced to buyout these shareholders who will pick up more than 10 per cent, not with an intent to take over the company but to create a nuisance value and then exit by selling at hefty prices. Share prices of some top companies are going at throwaway prices which is enough to prompt such an investor to pick up 10 per cent andsit pretty till such time the harried promoter comes out and offers a huge price for the exit of this investor," said another top merchant banker of the Bhagwati panel.

"There are several Indian companies where the promoters do not have significant stake and hence they become totally vulnerable to someone coming and sitting on their board with a 10 per cent stake", said a top mergers and acquisitions expert.

"We were discussing this issue for a long time and many of us were of the opinion that the threshold should not be hiked. In fact, when the SEBI chairman had sought certain interim recommendations from the committee, we felt that hiking the creeping acquisition to 5 per cent was proper as this in any case had been recommended by the panel when the revised code was structured in 1996. The regulator had rejected the suggestion then. But no recommendation had been given on the threshold limit," said a committee member.

"We have been spending a large amount of our time in attending the deliberations ofthe committee. But if at the end of it the regulator has to take an arbitrary decision then what is the point in setting up a committee," a peeved member told The Financial Express.

Another pointed out that even the prime minister had said in his address that the changes in the takeover code would be brought about in keeping with the recommendations of the Bhagwati panel. "This has not happened as the committee had not recommended the hike in the limit," said a committee member.

The SEBI board had cleared amendments in the takeover regulations through circulation on Friday, a day before the prime minister announced that changes would be brought about in the regulations. The changes were notified in the official gazette on Thursday.