Margin woes to continue

Final decision on Takeover Code unlikely at Feb 7 meet.

The Bimal Jalan Committee report will have to wait for some time to get the regulatory nod. The board of the Securities and Exchange Board of India (Sebi), scheduled to meet on February 7, has not included it in the agenda. While the Takeover Code will be the highlight of the board meet, a final decision is unlikely due to the finance ministry’s reservations over certain issues.

According to people familiar with the development, Sebi officials need more time to deliberate on the recommendations of the committee, formed to review the ownership and governance of market infrastructure institutions (MIIs), including stock exchanges, depositories and clearing corporations.

“There are certain issues (in the Jalan report) on which consensus has not been reached and some more time is required for discussions,” said a person privy to the developments. “It will be placed before the board only after the regulator is through with its own share of deliberations,” he added on condition of anonymity. This will also be the last board meeting for chairman C B Bhave if he does not get an extension. His three-year term ends on February 17.

The Jalan report, among other things, has recommended capping profits of MIIs, allowing only banks and public financial institutions as anchor investors and not allowing these institutions to list. Ever since the report has been made public, there has been a lot of diverse feedback from industry participants, with many opposing most of the recommendations.

Meanwhile, the Sebi board will take up the pending Takeover Code, discussions on which remained “inconclusive” during the last board meet held on October 25, 2010. People familiar with the development, however, say a final decision will probably not be taken as the finance ministry is yet to take a final call on issues such as the quantum of the open offer, etc.

The Achuthan committee, which has framed the proposed regulations, has said the acquirer should make an open offer for all the remaining shares, as against the current practice of 20 per cent.

Early this month, Sebi whole-time member K M Abraham had said on the sidelines of a conference that a final decision on the code would take more time. “It will probably take one or two more board meetings to arrive at a decision,” he had said, while refusing to give a specific timeline.

Reports suggest the regulator will also discuss the issue of further reduction in the timeline for initial public offers (IPOs) from the current 12 days to seven days and the framework for the rights issues of Indian depository receipts. Bhave, incidentally, has reiterated his aim of cutting the IPO timeline to one week on several occasions during his tenure.