Sebi mulls exemption from open offer in forfeiture of shares

Under Sebi's takeover norms, any entity having over 25% stake in a listed firm can hike the shareholding by up to 5% in a financial year

Sebi has proposed exemption from making an open offer for entities whose shareholding in a listed company increases due to forfeiture of shares.

The board of Securities and Exchange Board of India (Sebi), which met here today, discussed the matter related to review of the policy relating to forfeiture of partly paid-up shares.

The proposal is to "provide general exemption from the open offer obligations under SEBI (SAST) Regulations, 2011 in cases of increase in voting rights as a result of expiry of call notice period and forfeiture of shares," Sebi said in a release issued after the board meeting.

Amendments to Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 would be proposed and a discussion paper would be put for public comments.

In case of forfeiture of shares, there would be changes in existing shareholding pattern and that could trigger open offer obligations for concerned entities.

Under Sebi's takeover norms, any entity having over 25 per cent stake in a listed firm can hike the shareholding by up to 5 per cent in a financial year. If the limit is breached in a fiscal, then that entity would have to make an open offer.