INDIA: Proposed new India Takeover Regulations

Monday August 1 2011

The SEBI Board have considered the Report of the Takeover Regulations Advisory Committee (TRAC) and accepted most of the recommendations of TRAC regarding amendments to the new India takeover rules. The major recommendations approved include:- Initial trigger threshold increased to 25 % from the existing 15 %.- There shall be no separate provision for non-compete fees and all shareholders shall be given exit at the same price.- In cases of competitive offers, the successful bidder can acquire shares of other bidder(s) after the offer period without attracting open offer obligations.- Voluntary offers have been introduced subject to certain conditions.- A recommendation on the offer by the Board of Target Company has been made mandatory.As regards definition of control and offer size, the Board decided as under:- Existing definition of control shall be retained as it is.- The minimum offer size shall be increased from the existing 20 % of the total issued capital to 26 % of the total issued capital.The Board did not accept the recommendation of TRAC to provide for delisting pursuant to an offer and proportionate acceptance.The SEBI(Substantial Acquisition of Shares and Takeovers) Regulations 1997 have yet to be amended.

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