SEBI had constituted a Committee called the “Takeover Regulations Advisory Committee (TRAC)” which has recommended amendments to the procedure for corporate acquisitions. The mandate of the committee was to examine and review SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and to suggest suitable amendments therein.
The Committee consisted of experts in the relevant areas and was headed by Mr. C. Achuthan, Former Presiding Officer, Securities Appellate Tribunal.
The salient and significant departures recommended by the Committee include:
• Initial trigger for an open offer to be 25 per cent of the voting capital of a listed company.
• Compulsory open offer for all the shares of the target company.
• The creeping limit of 5 per cent per annum, to be made applicable till the aggregate post-acquisition shareholding of the acquirer reaches the maximum permissible non-public shareholding limit.
• The minimum offer price will be based on 12 weeks’ volume weighted average of market prices.
The Government would take a view on the recommendations of the Committee when they are considered by the SEBI Board.
The compulsory requirement to make open offer of 100 percent of shares would ensure equality of opportunity to all shareholders. This requirement will prevent non-serious entities from making takeover efforts.
This information was given by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to an Unstarred Question raised in Lok Sabha today.
