SEBI raises promoters' creeping acquisition limit to 75 per cent

Mumbai: The Securities and Exchange Board of India (SEBI) has raised the creeping acquisition limit for company promoters from 55 per cent to 75 per cent of the total equity shareholding.

Promoters can now increase their stake up to 75 per cent through creeping acquisition, but they will have to buy shares through normal market purchase and not through bulk, block or negotiated deals.

SEBI, however, has set a an annual five per cent limit for creeping acquisition by company promoters. They won't have to seek regulatory permission for increasing stake by up to five per cent, SEBI said in a release.

The announcement was made on Monday, in a bid to bolster investor sentiment after the BSE Sensex fell below 8,000, falling by over 1,000 points intra-day before recovering to 8,509.

This may prompt certain set of promoters with strong cash reserves to up their stakes in case there is a huge price fall. The step is expected to help Sensex companies like ACC, Bharti Airtel, Grasim, HDFC, Hindustan Unilever, Hindalco, Infosys, Jaiprakash Associates, Larsen and Toubro, Maruti Suzuki, ranbaxy laboratories, Reliance Communications, Reliance Infrastructure, reliance Industries, Satyam Computer, State Bank of India, Sterlite Industries, Tata Motors, Tata Power and Tata Steel.

SEBI expects the move to motivate promoters to up their stakes in times of a crisis and also be a support to the market price in the turbulent days. 

The announcement comes at a time when many promoters have complained of deliberate and persistent hammering of stock prices, without any regard to a company's fundamentals.