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Post Satyam's plea, SEBI to ease takeover rules
By siliconindia
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Saturday, 07 February 2009, 22:27 IST |
1 Comments
Mumbai: Contemplating on the present speculations on acquisition of Satyam Computer, SEBI has decided to ease the takeover regulations. The decision came as a reaction to the plea from Satyam's board for certain exemptions from the takeover regulations.
"The SEBI Board recognized the special circumstances that have arisen in Satyam and concluded that the amendments must be made in a general context rather than in a specific case," said C.B. Bhave, Chairman of SEBI. The exemptions sought by Satyam relate to the open offer price in case of a takeover, as several companies like Larsen & Toubro and Spice has shown interest in buying the company. As per the current regulations of SEBI, the offer price would be the higher of the six-month and the 2-week averages of the market price of Satyam, working out to be much higher than the current market price of the stock. Since the revelation of the biggest corporate fraud in Satyam, the company's stocks sank ad infinitum. However, the prospects of takeover have slowly strengthened the stocks.
The Satyam stock sank like a stone on January 7 upon its promoter's confession of a fraud in his company. It has gained a little since then, on the back of speculation that there might be a takeover. "Prices prior to and including January 7 were those based on certain company information put out in public which now seem to be no longer valid; those accounting statements have been withdrawn by the auditors themselves. So under such circumstances, whether that price should be used or not is to be considered," Bhave said. He also maintained that the changes will be applicable in general and not only for Satyam, thus, making the price for acquisitions more transparent.
On the IPO front, SEBI eased rules, allowing companies to announce their price-band even up to two days before the opening date of the issue. The price bands are usually announced in the Red Herring Prospectus about two weeks before the opening date. The timelines for bonuses has also been reduced to 15 days between the Board decision and completion of bonus issue, when the articles of the company don't call for shareholder approval. Where shareholder approval is required, the time line is 60 days. Earlier it was six months for both.