Takeover code set for complete makeover SEBI (SAST) Regulations, 1997 which has been introduced in the year 1997 are now under consideration for a substantial change. The securities and Exchange Board of India has set up a committee under the head of Mr. C Achutan, former presiding officer in the Securities Appellate Tribunal to review the existing the provision of the SEBI Takeover Code and to make modification in some of its key provisions such as relating to the triggering limit of open offer requirement so as to address the changing circumstances and needs of corporate sector. A brief of the probable change from the existing provisions is given below: Regulation Title Existing Provision Probable change Rationale behind the change Regulation 10: Acquisition of fifteen or more of the shares or voting rights of any company. No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen percent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations. The limit of 15% provides in regulation 10 may increase to 25%. In other words, in the future, the acquirer may be required to give the open offer on the acquisition of 25% or more shares of the Target Company in place of the existing limit of 15%. The existing provision of the regulation 10 restrict private equity fund to make the large investment in the company. As the objective of the private equity fund behind such acquisition is not to control the company in any way, therefore, they have restrict themselves so that they do not have to make the open offer. The proposed new provision will give them some relaxation and a scope of increasing the shareholding to 25%. The limit is expected to increase upto 25% as any increase beyond 25% will give the power to the acquirer to block the special resolution. Indirect acquisition Any management change in Target Company listed in India due to the acquisition of any parent company whether listed in India or abroad, will trigger the SEBI Takeover Code. This requirement may be twist and turn in line with the court decision. The indirect acquisition of Target Company is generally a matter of controversy some time relating to the pricing norms e.g in the case of BP Amoco’s takeover of Castrol or some time in respect of other provisions relating to open offer requirement. Non compete fees clause At present, non- compete fees of upto 25% of the deal size can be paid to the seller and is not required to be included in the offer price. This provision may be omitted. There has always been a objection from the investors group regarding the provision of non compete fees. Therefore, the committee will also look into these aspects.

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