Sebi clarifies on creeping acquisition

The Securities and Exchange Board of India (Sebi) today clarified that promoters and persons acting in concert could increase their stake by 5 per cent only for a single time and not annually or quarterly. It has also said that the stake hike could be done in one or several tranches.

An earlier Sebi circular had allowed creeping acquisition of up to 5 per cent if a person, together with persons acting in concert (PACs), holds above 55 per cent, but below 75 per cent of the equity share capital in the target company.

Sebi had earlier said that there was no specified time period within which one needed to operationalise the 5 per cent stake hike. It could be done as and when needed and no time period had been fixed.

Sebi has also clarified that the stake hike cannot be done post 75 per cent. For instance, if it is at 73 per cent, a 5 per cent stake hike would mean 78 per cent. However, it will be capped at 75 per cent.