SEBI Plans To Amend Takeover Regulations, Remove Inconsistencies

The Securities and Exchange Board of India is likely to change certain provisions in the takeover regulations, including those pertaining to revision of open offer price, a senior official said.

The market regulator’s move comes after public consultations on a discussion paper about review of Substantial Acquisition of Shares and Takeover regulations.

The review exercise was aimed at simplifying the language, removing redundant provisions and inconsistencies as well as update references about the Companies Act, 2013 in the regulations, according to the official.

“It is being proposed that the additional time for the upward revision of open offer price can be extended to only one working day before the commencement of the offer,” the SEBI official said. “This time frame has been decided upon as revision of the open offer price during the period of tendering of shares might create confusion among investors.”

The discussion paper had suggested four working days prior to closure of the tendering period for open offer price revision. The regulator, however, has decided to modify it after taking into consideration comments received during the public consultation process.

The proposed changes are expected to be discussed at SEBI’s board meeting to be held on June 21.

According to SEBI’s norms, an entity is required to make an open offer to the public shareholders when its shareholding in a listed company crosses certain thresholds.

Among others, the definition of ‘frequently traded shares’ would be revised and the option to keep the cash component of the escrow account in an interest-bearing account would be introduced in the Substantial Acquisition of Shares and Takeover regulations, the official said.

Another proposed change is to provide the option to dispatch a letter of offer through electronic mode.