Takeover panel flays exemption

MUMBAI, NOV 12: The Justice Bhagwati committee on takeovers which met on Thursday expressed the view that no general exception should be mad...

MUMBAI, NOV 12: The Justice Bhagwati committee on takeovers which met on Thursday expressed the view that no general exception should be made regarding the takeover code if a promoter8217;s or any shareholder8217;s holding breaches the prescribed limits post-buyback.

This contradicts an earlier view expressed by Sebi that hike in promoters8217; holding post-buy-back would be given a general exemption under the takeover code. Sebi had, however, left the modalities to be worked out by the Bhagwati panel.

The committee also expressed a view that while a takeover offer is on, a company would be allowed to make a buyback offer only if it has a special resolution to this effect. When a takeover bid is in progress, the capital should be left untouched, it said. This means that while it would be technically possible to have a takeover offer and a share buy-back offer running simultaneously, this would practically impossible.

quot;We discussed exhaustively the implications of buy-back on the takeover code. The final decision onsome points in the takeover code would be taken tomorrow,quot; justice Bhagwati said. However, he declined to comment on the deliberations.

Committee members, however, told The Financial Express that the panel had more or less crystallised8217; its views and would be finalising them on Friday. Sebi chairman DR Mehta and several other committee members were not present at Thursday8217;s meeting.

quot;Even though some of the committee members felt that the takeover code should not be triggered off in case of buy-back, the committee felt that acquisition of shares as defined under the takeover code would lead to a hike in holding through share buy-back within the ambit of the takeover code. In the event of shares acquired via invoking a pledge against shares, too, the takeover code gets attracted, so why not in this case too,quot; a committee member said.

Merchant bankers on the committee, however, felt that this would make the task difficult for promoters.