Takeover Code

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Overview:

Recently, the Security and Exchange Board of India, SEBI, made amendments to the takeover code.

About Takeover Code:

  • The amendments to the SEBI (substantial acquisition of shares and takeover) Regulations were notified recently.
  • The board has gone away with the rule that used to link open price offer to the last 60 days’ trading volume.
  • Post the latest change in Takeover Code, acquirers would enjoy flexibility in pricing their open offers for minority shareholders and not be required to calculate the open offer price linked to 60 days volume weighted average market price (VWAMP) prior to the date of public announcement.
  • The earlier requirement of calculating 60 days VWAMP for determination of open offer price in case of disinvestment of PSU Companies, wherein it results in its change in control, has been dispensed with.
  • The change has been made to ease strategic investments in public sector units for the Central and State governments.
  • Ease of Business:
    • Acquirers would enjoy flexibility in pricing their open offers for minority shareholders
    • Offers level playing field with private sector
    • Provides a financial certainty to strategic investors
    • Will boost transparency in disinvestments

Source : The Hindu Businessline