Mumbai: India’s takeover code, which governs mergers and acquisitions of listed firms, is in for a major overhaul. C. Achuthan, chairman of market regulator Security and Exchange Board of India’s (Sebi) takeover code committee, said in an interview that big-ticket changes such as a hike in 15% trigger limit and a 100% open offer are being considered. Edited excerpts:
What is the ambit of your review of the takeover code?
The reference is to review the takeover code as a whole. If substantial amendments are required, then instead of tinkering with the regulation, we may even rewrite. If only minor changes are required, it will only be repair work. A lot of cleaning will have to be done in the existing regulation.
Do you believe it needs to be simpler, clearer and more precise?
Absolutely, no doubt about it. Clarity is lacking, and even the user constituency is not clear, and the regulator is also not clear at times. So clarity is necessary. What is regulated has to be made clear, how it is to be regulated should also be made clear, and if we consider it necessary, we have no hesitation in discarding one and ...recommend a new regulation.
When will you conclude the review?
Rules of the game: C. Achuthan, chairman of Sebi’s takeover code panel. Shashank Parade / PTI
We want to complete it by 31 March.
Do you intend to define control or add more specific clauses?
We are examining it. I cannot say anything about it. We will be too happy if we can put a very clear definition.
On the trigger side, we’ve been living with this 15% stake holding or change in control as the trigger. Does this need a relook?
We are examining that also. Ten, 11 and 12 are the core sections. Section 10 talks about the initial acquisition. Eleven talks about the consolidation, and 12 is about the control. We are revisiting (them). If necessary, we will change the threshold. But at this stage, we have not come to any firm conclusion.
So that is one of the things you are considering...
There is no such demand from the public, but it should be logical. If you are increasing or decreasing, there should be a reason for that. Why should 15% be brought to 10%? If you remember, initially, it was 10%... then it became 15%.
Similarly, creeping acquisition: it had gone to the level of two, five, 10... and then again came back to five, then two, then again 10. There has to be a reason. You know, you cannot simply pick up a number and say this is good. For everything, a justifiable reason should be there.
Do you think there is uncertainty and lack of clarity on creeping acquisitions?
(In section) 10, there is no problem. (In sections) 11 and 12, there is a lot of confusion, that is, creeping acquisition and acquisition of control.
So at least these two sections are being thoroughly looked into?
See, we are trying our best to iron out all these sort of confusions.
When you make an offer, shouldn’t it be to every shareholder? Hundred per cent rather than to just 20%? Is that something you are considering?
No. As on date, the regulation has put a minimum at 20%. Perhaps we may revisit that also. Perhaps it will become 100%. We can’t say at this stage because we have got a lot of representations on these issues and we are examining them.
There are so many exemptions as well. Do you see a need to tighten that?
We have to take these up one by one. And if they are redundant, then we will discard them. Exemptions should not be a rule. It should actually be an exemption.
So you definitely want to look at that as well?
Like I told you, every aspect is being looked at. Even the code as a whole; not excluding anything, right from the definition to the repeal.