Abstract
Merger & Acquisition in India have been governed by the age-old takeover rules. It seems that now, the Securities and Exchange Board of India (SEBI) has realized that these rules need to be revamped to keep them in line with the ever-changing global scenario. On September 2011, the SEBI amended the new set of takeover rules i.e.; the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The main purpose is to prevent hostile takeovers and at the same time, provide some more opportunities of exit to innocent shareholders who do not wish to be associated with a particular acquirer. With these rules coming into force, both promoter and public shareholders of a listed company would now get the same price for their shares being purchased by an acquirer. In another shareholder-friendly move, SEBI has scrapped the noncompete fee or control premium, which were being paid to only the promoters earlier and could have been as much as 25% of the public offer price. The SEBI has successfully done one part of the reform process by preparing the new takeover code, the other part requires it successful implementation.
Highlights
For the past few years, the M&A deals in India have been governed by the age-old takeover rules
With these rules coming into force, both promoter and public shareholders of a listed company would get the same price for their shares being purchased by an acquirer
The Securities and Exchange Board of India (SEBI) has realized that these rules need to be revamped to keep them in line with the ever-changing global scenario
Summary
For the past few years, the M&A deals in India have been governed by the age-old takeover rules. A lot has changed in the corporate world during this while It seems that the SEBI has realized that these rules need to be revamped to keep them in line with the ever-changing global scenario. The law prescribing the rules of takeover of listed companies in India is more than 9 years old It was formulated by the Securities and Exchange Board of India (SEBI) and is called the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (Takeover Code or Takeover Regulations). During these 9 years, the Takeover Code has been amended about 5 times with the latest amendment made on May 26, 2006. This article provides an overview of the Takeover Code, 2011 and discusses some of the most important amendments that have been brought about
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