SEBI notifies new takeover norms with open offer trigger at 25 per cent

The Securities and Exchange Board of India (SEBI) today notified the new takeover regulations with the open offer trigger at 25 per cent, beyond which the acquirer will have to mandatorily make an open offer to buy an additional 26 per cent shares from the public.

The new  `Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 raises the open offer size for public shareholders during takeover of any listed company to 26 per cent from the current 20 per cent. Also, the trigger for making such an offer has been raised to 25 per cent from the current 15 per cent.

"No acquirer shall acquire shares or voting rights in a target company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such target company, entitle them to exercise twenty-five per cent or more of the voting rights in such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations," the SEBI notification said.

The new regulations, which will come into effect from next month, have no provision for non-compete fees, which allows promoters to higher price than the public shareholders. Instead it entitles all shareholders to equal treatment in terms of price realisation.

Consequently, SEBI has also done away with the non-compete fees that acquirers generally pay to the sellers in merger and acquisition deals.

The notification follows the decision taken at SEBI's board meeting in July.