This contradicts an earlier view expressed by SEBI that hike in promoters' holding post-buy-back would be given a general exemption under the takeover code. SEBI had, however, left the modalities to be worked out by the Bhagwati panel.

The committee said that increase in holding via the buy-back route would amount to an acquisition and hence should attract the takeover code provisions. It was, however, felt that under certain circumstances the requirement of making an open offer to shareholders may be done away with. The situations under which this exemption can be granted will be outlined by the committee on Friday.

The committee also expressed a view that while a takeover offer is on, a company would be allowed to make a buyback offer only if ithas a special resolution to this effect. When a takeover bid is in progress, the capital should be left untouched, it said. This means that while it would be technically possible to have a takeover offer and a share buy-back offer running simultaneously, this would practically impossible.

"We discussed exhaustively the implications of buy-back on the takeover code. The final decision on some points in the takeover code would be taken tomorrow," justice Bhagwati said. However, he declined to comment on the deliberations.

Committee members, however, told The Financial Express that the panel had more or less `crystallised' its views and would be finalising them on Friday. SEBI chairman DR Mehta and several other committee members were not present at Thursday's meeting.

"Even though some of the committee members felt that the takeover code should not be triggered off in case of buy-back, the committee felt that acquisition of shares as defined under the takeover code would lead to a hike in holdingthrough share buy-back within the ambit of the takeover code. In the event of shares acquired via invoking a pledge against shares, too, the takeover code gets attracted, so why not in this case too," a committee member said.

Merchant bankers on the committee, however, felt that this would make the task difficult for promoters as the minute his holding rises beyond the prescribed limits he would need to make an open offer, which he may not want to at that point of time.

It was therefore decided to put in place some general conditions under which exemption from the takeover code would be accorded.