Sebi to empower retail investors in takeovers, IPOs

Market watchdog the Securities and Exchange Board of India (Sebi) will on Monday consider giving more teeth to the retail investors at the time of initial public offers (IPOs) as also takeovers of the listed companies, by way of allowing them a larger pie when companies go public and a better price when companies get acquired.

In its board meeting scheduled for Monday, the Sebi will consider final guidelines on two key aspects of the capital market, IPOs and takeovers, after taking into account the public comments for the draft guidelines floated by the regulator on these issues.

Sources said that Sebi would consider in the meeting the final form of the new Takeover Code, which among other changes proposes to bring in retail shareholders at par with the promoters in terms of price received in the M&A deals.

The regulator has collated all the public comments, which are divergent in nature on various aspects of the proposed draft Takeover Code, and a final decision could be taken on Monday, a senior official said.

At the same time, the Sebi board is also likely to consider final approval to the recently proposed draft guidelines on enhancing the purchasing power of retail investors in the IPOs.

In the draft guidelines, Sebi has proposed to raise the ceiling for retail investors to Rs 2 lakh in public issues, from Rs 1 lakh currently.

The regulator has received positive feedback on this proposal and might soon revise its regulations to allow retail investors to invest up to Rs 2 lakh in public issues, sources said.

The investment limit for retail investors was raised way back in 2005 from Rs 50,000 to Rs 1,00,000 in public issues.

Given that annual inflation has soared from around 4 per cent in 2005 to well over 10 per cent in the recent past and the rise in the number of investors in tandem with market levels, Sebi thought it's appropriate to raise the limits.

Sources said that there have been mostly positive comments also on the guidelines proposed in the draft Takeover Code, especially for the one enhancing the public offer trigger point to 25 per cent, from 15 per cent currently.

However, there has been no unanimous view on the acquirer being asked to mandatorily make an offer for the entire 100 per cent holding in the public offers, so that public shareholders also get an opportunity along with the promoters to exit the company.

The recommendations were made by the Takeover Regulatory Advisory Committee, which was constituted by Sebi to suggest changes in the existing Takeover Code.