Bajoria issue 8212; SEBI to rework takeover Code

quot;I am not commenting on the Bajoria issue8230; we think that there is need for changes in the Takeover Code and have appointed a committee headed by Justice Bhagwati committee for making further changes,quot; Mehta told reporters in the capital.

Calcutta-based jute baron Arun Bajoria claimed that he had acquired 14 per cent in Nusli Wadia8217;s company. Asked whether the regulator has sought more powers to the government, Mehta said the Dhanuka committee recommendations are already with the government for necessary action. quot;The government is examining the request,quot; he added.

According to Sebi8217;s takeover code, the acquirer can purchase up to 15 per cent from the secondary market in any given 12-month period without triggering off an open offer. The promoter, on the other hand, can only acquire five per cent. In the interest of fair corporate governance, promoters feel that this asymmetry ought to be removed. If the acquirer8217;s trigger continues to remain at 15 per cent, then the promoter8217;s trigger should be the same, they argue.

Leading businessmen and chambers of commerce had recently urged the Sebi for an urgent review of the takeover code and strengthen regulations, especially in the case of creeping acquisitions, in the wake of the raging corporate battle between Nusli Wadia of Bombay Dyeing and jute baron Arun Bajoria.

With corporate raiders breathing down the necks of traditional business families, almost all industry bodies have come out in favour of tightening rules. 8220;It is easier for an outsider to mount an offensive than an insider to defend his own turf. Today a raider can keep acquiring shares up to 15 per cent of a company equity without having to make an open offer, whereas a promoter can raise his holding in his own company by only five per cent every year through the creeping acquisition route, this is unfair,8221; said a corporate source.

Since time is the essence in any takeover decision, analysts feel the market regulator should expeditiously arrive at a decision. 8220;In the interest of taking a decision fast, Sebi should insist on both parties submitting the required documents as soon as possible. Any additional delay by the capital market regulator will create unnecessary speculative pressure in stock markets,8221; they said.

Assocham has suggested that a promoter should be allowed to raise holdings at his own pace up to 51 per cent without any annual ceilings. 8220;The environment is currently one of uncertainty and insecurity. This adds on to the depressed sentiment which is already prevailing. The capital market is already depressed. Equity values and market capitalisation are very low and do not reflect the company8217;s wealth adequately,8221; said an analyst.

Equally, given the importance of the takeover code, Sebi should ensure that the letter and spirit of the code should be followed. CII, according to its president Arun Bharat Ram, was not against 8220;takeovers8221; per se but the process should be transparent, adhering to the principles of corporate governance on which CII had taken a pioneering initiative with the CII corporate governance code. The principle objective must necessarily be to promote shareholder value, he added.

Analysts also feel there is a need to have a mechanism under the Depositories Act where preventive steps could be taken to refuse the transfer of shares. 8220;The transfer of securities in the demat regime is automatic and the Depositories Act supersedes the provision of the Companies Act which allow the companies right to refuse transfers if it is against the interest of shareholders at large,8221; they said.

Assocham said Sebi should be more proactive and its vigilance and monitoring needs to be sharpened. Sebi should resolve the disputes under the takeover code in a quick and time bound manner.

Ficci said though quot;existing rules and guidelines of Sebi cannot be set aside while judging the claims of Arun Bajoria, an atmosphere of hostile takeovers should not be encouraged. 8220;Five per cent creeping acquisition by the promoter does not provide level playing field against corporate raiders and FIs should not disrupt existing managements,quot; Ficci president GP Goenka said.

SEBI confused, says Ficci official
MUMBAI:Ficci Secretary General Amit Mitra has said that the indecision of market regulator in the case of Bombay Dyeing shows that it is confused. 8220;During our presentations, we had told the Justice Bhagwati committee that 5 per cent creeping acquisition is too low. We still hold the same view.8221;

8220;But if Bajoria has acquired shares in Bombay Dyeing as per the present takeover code8230; then we should give him the same treatment as we give to any other promoter. We should not come in the way of any acquisition which meets the present laws of the land,8221; Mitra said here on Wednesday. 8220;The promoters with bad track record should go,8221; he added.