Takeover code,stock exchange ownership issues await new Sebi chief

The last three years under CB Bhave,the outgoing chairman of the Sebi,saw several initiatives across the capital market spectrum,the most notable being the reforms in the mutual fund sector,especially the scrapping of entry load,changes in the IPO (initial public offering) norms, punishing the IPO manipulators,forcing the insurance regulator to change the ULIP norms,tightening of the rules of stock brokers and exchanges,tough actions against corporates and directors involved in manipulation,changes in the guidelines for participatory notes and the deft handling of the markets when the global financial crisis and market meltdown hit the world markets in 2009.

Bhave has left two major issues that he has initiated to his successor for taking to their logical conclusion. The first is the new takeover code. The Achutan committee appointed by the Sebi has proposed to increase the threshold for takeovers to 25 per cent from the current 15 per cent,apart from hiking the size of the subsequent mandatory open offer to allow every investor to participate. The rationale for its proposal for a 100 per cent open offer up from the current of 20 per cent is that all investors should be given an opportunity to exit,not just some shareholders. The committee is also for seamless delisting of the target company,should the acquirer be able to access 90 per cent of the shares.

According to experts tracking Sebi policies,these are major proposals which will impact the corporate sector plans in a big way. Predictably,several corporates are against the proposal for 100 per cent open offer as it will lead to a steep rise in cost of acquisition. Another big report awaiting Sinha is the Bimal Jalan committee report on market infrastructure institutions like stock exchanges and depositories. In a setback to the promoters of MCX Stock Exchange (MCX-SX),the Jalan committee had proposed the individual ownership cap,in a stock exchange,at 5 per cent.

The panel is not in favour of permitting the listing of market infrastructure institutions which is a setback for exchanges like the BSE. The Jalan report is already widely debated as the stakes are very high for some of the players. Sinha will have to go for a practical approach without compromising on market integrity and fairness.

Sinha gets 3-year term

Mumbai: Like CB Bhave,UK Sinha has also got a three-year term. Sinha,58,has been appointed as Sebi chief for a period of three years from February 18,2011,said a notification issued by the government on Thursday. He will be the eighth chief of Sebi. Sinha has been appointed as the chairman,Sebi,initially for a period of three years with effect from the date he assumes charge of the post on or after February 18,2011 or till he attains the age of 65 years or until further orders,whichever is earlier, it said. ENS