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MUMBAI, April 16

THE Securities and Exchange Board of India's takeover panel has suggested further tightening of share acquisition norms.

According to Mr Justice P.N. Bhagwati, who heads the SEBI's takeover panel, if the acquirer fails to make an open offer after crossing the 15 per cent threshold limit, the additional shares acquired by him (from the last disclosure) would be considered null and void.

Addressing a seminar on capital market organised by FICCI here today, Mr Bhagwati said the takeover committee has recommended various changes to the takeover code which would be made effective shortly.

He said the group is planning to bring more transparency and strengthen disclosure requirements in the takeover regulations.

As part of this, the group has suggested that other than making disclosures of holding after crossing 5 per cent, 10 per cent and 14 per cent, the acquirer will also have to disclose whenever he sells two per cent stake over the 5 per cent limit.

"This will help the market know what the acquirer is doing with his holding. Normally, the market knows when the shares are acquired, but don't know when they are sold. With this provision, this gap would be removed," he said.

On the preferential issue, Mr Bhagwati said in case the holding increases over 15 per cent after the preferential allotment, the acquirer has to make an open offer for a minimum of 20 per cent. The group has recommended that inter-group transfer of shares among the promoters over five per cent (beyond the 15 per cent limit) can get exempted from the open offer, provided this information about the group companies is public knowledge. This has been recommended as some of the companies take advantage of the regulation to avoid making an open offer. In case the transfer of shares (among the promoter group) is made at a premium of over 25 per cent to the prevailing market price, then the open offer need to be made.

For NRIs and foreign investors acquiring over five per cent in a company, the acquirer has to seek the permission of the Government and the board of the target company.

The takeover committee has said that the takeover panel, for exemption for making an open offer, should be given a personal hearing to give the reason in the case.

Earlier, the SEBI Chairman. Mr G.N. Bajpai, said the market regulator aimed at making Indian capital market efficient and highly investor-friendly.

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