SEBI's Big Announcements

The Securities and Exchange Board of India (SEBI)’s much awaited decision on the Take over Code has come on expected lines. Recommendations of the Takeover Regulations Advisory Committee (TRAC), under the chairmanship of C.Achutan have, by and large, been accepted. The mandatory open offer size has been increased by 6% to 26%. This earlier was 20%. The trigger point for buyout now stands at 25% which earlier stood at 15%. Now, with these improvisations, the acquiring companies will now have to make a mandatory open offer for a further 26% stake after buying out 25% in takeovers. Apart from this, the non-compete fees which was paid by the acquirers has been abolished. The new rules are likely to make M&As expensive, while offering better terms to minority shareholders.

Apart from these, SEBI came out with a few other changes. It has made it mandatory for the merchant banks to disclose track record to IPO investors and has initiated a process to make IPO forms shorter and simpler. The board has approved uniform KYC norms for all stock market transactions and mutual fund investors will now have to pay an additional fee of Rs 100-150 for every transaction.