Sebi to cut processing time for open offers to 90 days

The Securities and Exchange Board of India (Sebi) has decided to reduce the period for completion of the open offer process for takeovers fr...

The Securities and Exchange Board of India (Sebi) has decided to reduce the period for completion of the open offer process for takeovers from the current 120 days to 90 days. This decision was taken at the Sebi board meeting held in New Delhi on Saturday.

The move is intended to reduce the time and cost involved and is expected to benefit both the corporates and investors as the acceptance of their shares would be quicker and payment for their accepted holdings will be faster than the earlier setup of four months.

The open offer for acquiring the shares is made by the acquirer to the public shareholders of the company under the Sebi Substantial Acquisition of Shares and Takeovers (SAST) Regulations, 1997.

The open offer process begins with the making of the public announcement declaring the intention to acquire shares from the minority shareholders. The acquirer has to complete all formalities pertaining to the offer from that day within 120 days, including making payments and filing the final report with the regulator.

Merchant banking circles have welcomed the decision. The time required to challenge the Sebi order in the case of the violation of SAST regulations, in the SAT should also come down proportionately from the current 45 days.

With the reduction in the time period, the regulator should also keep in mind the approvals like clearing of the offer document. Formalities with RBI and the FIPB also have to completed in case of a takeover triggering overseas, to facilitate the completion of the process within the stipulated time.