Centre may put curbs on placements by FIs
New Delhi : The government is considering restricting the scope of private placements, particularly by financial institutions (FIs).

Currently there are no norms for private placement by a bank or financial institution in the debt or equity of a company, no monitoring, as a result of which many an investment is made at a premium to existing market prices, with impunity. This is a cause for concern especially since private placements are increasingly taking the role of public issues, especially when NBFCs use public money for such investments.

A private placement is supposed to be involved only among close associates and is "an honourable route" for raising especially debt as Tier-II capital for companies which do not want to access the market. But quite often, companies solicit investment through mailers and open letters, from totally unknown entities.

In the absence of any regulation, the price could be too high, and the danger is all the more when banks and financial institutions enter into such deals, using public money.
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Passive promoters not barred from open offers
Mumbai : The Securities and Exchange Board of India (Sebi) is planning major amendments in the takeover regulations which would be more in line with the decisions passed by the courts and the Securities Appellate Tribunal (SAT).

One decision that would affect the takeover code is that of SAT in the case of Modi Rubber where Sebi had disallowed M K Modi of Modipon from participating in the open offer since he was a promoter, and therefore working in concert with the acquirer. SAT ruled that a passive shareholder, even if he belonged to the promoter group should not be discriminated against, but be allowed to participate in the open offer like any other shareholder.

A passive shareholder was a promoter simpliciter, or dormant promoter, who, according to SAT, neither wants to acquire or agrees to acquire shares or voting rights or control over the company, hence could not be deemed to be acting in concert with the promoter, and could not be prevented by law to participate in the open offer. The tribunal here ruled that it was the conduct of the party that would determine whether the promoter was an active or passive one.

The incorporation of such amendments, it is believed, would help make the takeover code more flexible, and throw open an exit route for promoters would want to get out of that investment.
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Brokers seek fairness in derivatives licencing
Mumbai : Several small and medium stock brokers are up in arms against the decision of Sebi not to issue fresh membership in the derivatives segment. With the derivatives segment picking up, and no other option before them after badla was banned in July, more and more brokers wish to take up a licence in derivatives trading.

However, Sebi stopped issuing fresh licences to brokers who have not cleared their dues, but the agitating brokers point to the fact that many of the brokers who have already been issued licences are yet to clear their outstanding on registration fees.

The brokers contend that Sebi should either issue licences without linking it with dues or fees, or apply the rule without discrimination and take away the licences of brokers who are yet to clear their outstanding fees.
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