Financial Daily from THE HINDU group of publications
Friday, Sep 13, 2002
Financial Daily from THE HINDU group of publications Friday, Sep 13, 2002 |
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Regulatory Bodies & Rulings Markets - Regulatory Bodies & Rulings Corporate - Mergers & Acquisitions SEBI to turn the heat on takeover code violators Our Bureau
NEW DELHI, Sept. 12 COMPANIES or individuals who have acquired shares of other firms by violating the provisions of the takeover code may soon find the Securities and Exchange Board of India (SEBI) divesting such shares either through a public auction or market mechanism. This is one of the punitive measures that SEBI can enforce against companies or individuals who violate the regulations to protect the interests of investors. According to the amendments to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2002 carried out by the capital markets regulator recently, the SEBI board will divest shares acquired by companies in breach of some of the provisions of the takeover regulations. The divestment of shares could be in its entirety, or in small lots or through a public offer. For undertaking this exercise, in the interest of the capital market or to protect the interests of investors, the SEBI board may appoint a merchant banker. Besides the option of divesting shares, SEBI can also direct the target company or depository to cancel the shares where the acquisition of shares has been carried out by violating the takeover regulations. Transfer of the proceeds or securities to the Investors Protection Fund of a recognised stock exchange, directing the target company or depository not to give effect to the transfer of shares or to further freeze the transfer of shares and not allowing such predators to exercise any voting rights are the other measures SEBI can undertake against violations of the takeover regulations. The SEBI board may also direct the person violating the takeover regulations to make a public offer to the shareholders of the target company at an offer price that it will determine. Besides these steps, the SEBI board will also reserve the right to debar any person violating the regulations from accessing the capital market or dealing in securities for such period as it may determine. SEBI will also direct the person not to dispose of assets of the target company.
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