Exit offers exempt from contra trade restrictions, says Sebi

Providing clarity to investors,  the Securities and Exchange Board of India (Sebi)  has said exit offers that give dissenting shareholders an opportunity to sell their shares in a listed company would be exempted from contra trade restrictions.

Exit offers are aimed at helping shareholders exit a listed firm if they are dissatisfied with any change in business plan of the company concerned after raising funds through IPOs, FPOs or any other capital-raising exercise involving public investors.

In a release today,Sebi clarified that "the exit offer is also exempted from the restriction on contra trade under the Prohibition of Insider Trading Regulations".

Generally, contra trade refers to opposite transactions and the watchdog's clarification implies that restrictions on selling shares would not be applicable in the case of an exit offer.

Last August, the regulator issued the Guidance Note on PIT Regulations, 2015, in order to remove certain difficulties in the interpretation or application of the provisions of these norms.

Buyback offers, open offers, rights issues, FPOs, bonus and the like of a listed company are available to designated persons also, and restriction of 'contra-trade' shall not apply in respect of such matters.

As per the amended Guidance Note, the restriction of contra trade will not be applicable to exit offers also.

Earlier this year, the regulator cleared a new set of norms for providing an exit route to the dissenting shareholders in the case of a listed company.

In this regard, amendments were made to the Sebi (Issue of Capital and Disclosure Requirements) Regulations, 2009.