Mumbai: The capital market regulator Securities & Exchange Board of India (Sebi) on Friday relaxed takeover rules for companies whose board has been superseded by the government, under which suitors such as those for Satyam Computer need not make an open offer.
The amended rules also does disallows open offers from rival bidders if an acquirer has already made an open offer.
The regulator said the amendment to the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, provides for “relaxation from the strict compliance of provisions of Chapter-III in certain cases.”
Chapter-III deals with mandatory open offer if an entity acquires 15% stake in a company, as also for acquisition or change of control of the company, among others.
Sebi, on an application made by a target company, said it can relax any or more provisions of this chapter if certain conditions are met. It was referring to cases where central, state government or any other regulator having superseded the board of a company.
The regulator had earlier this month said it would relax the takeover norms to deal with cases like Satyam Computer, whose government-appointed board had sought relaxation in the acquisition rules.
The government had superseded the IT company’s board after the its founder Ramalinga Raju disclosed on 7 January that he had fudged accounts for years.
Among other conditions that firms need to meet for availing of the relaxation in acquisition norms, the regulator said the government-appointed directors should have devised a “plan which provides for transparent, open and a competitive process for continued operation of the target company...
“...and such plan does not further the interest of any particular acquirer.”
The board would also need to devise a process that lays down the details, including timing for public offer, and the manner in which the change of control would be effected.
Sebi further said that if it feels that its Chapter-III provisions are impeding the implementation of the target company’s plan and the relaxation is in the interest of public, investors and market, it may ease the rules.
Engineering major Larsen & Toubro (L&T) had in January increased its stake in Satyam to over 12%. “We cannot buy beyond the threshold limit of 14.99% from the open market,” L&T’s chief financial officer Y M Deosthalee had then told PTI.
Later, L&T officials said that they were waiting for Satyam’s move on any future action.
In the meanwhile, Mahindras and B K Modi-promoted Spice Group too evinced interest in Satyam.