Acquirers of distressed companies exempted for making open offers

Investors who acquire major stakes in a company from lenders who had acquired stakes in distressed companies will be exempted from making the mandatory open offer, the Securities and Exchange Board of India (Sebi) Board decided on Wednesday.

At its meeting here, the Sebi Board, agreeing to the representations made to the markets regulator, has decided to exempt new investors who acquired shares from lenders as part of restructuring schemes from making mandatory open offer as it would reduce funds available for investment in the company.

"However, such relaxations shall be subject to certain conditions like approval by the shareholders of the companies by special resolution and lock-in of their shareholding for a minimum period of three years," Sebi said in a statement issued here.

"Further, it has also been decided to extend the said relaxations to the lenders under other restructuring schemes undertaken in accordance with guidelines of RBI," the statement added.

The Sebi Board also approved the proposal to provide exemption from open offer obligations, under the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, for acquisitions pursuant to resolution plans approved by National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.

The Sebi also proposed to amend Sebi (Foreign Portfolio Investors) Regulations, 2014 to expand eligible jurisdictions for grant of Foreign Portfolio Investors registration; for simplification of broad-based requirements, rationalisation of fit and proper criteria; and permit FPIs operating under the Multiple Investment Managers structure and holding Foreign Venture Capital Investors registration to appoint multiple custodians.

The market regulator approved the proposal for initiation of public consultation process on the above proposals.

The Board has decided to levy a "Regulatory Fee" of $1,000 on each Overseas Derivative Instruments subscriber, once every three years, starting from April 1. It has decided to prohibit ODIs from being issued against derivatives, except on those which are used for hedging purposes. Sebi will issue a circular in this regard.

It also decided to have a stakeholder consultation on the need to review the derivatives market framework including product suitability for investors so as to further strengthen the framework in line with the emerging trends and global best practices.

--IANS

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