Vijay Mallya Loan Default Case: Sebi To Crack Whip On Wilful Defaulters
Other steps high on Sebi’s agenda include greater penetration of various financial products, including corporate bonds, mutual funds and equity products while safeguarding the interest of small investors.
Sinha would also give a clear message that the regulator will keep a hawk’s eye on all kinds of manipulative activities, including those aimed at defrauding investors.
The regulator is also likely to discuss its budget estimates and planned policy measures for the next fiscal as also the status of the proposals that were planned for the current financial year ending this month.
Some of the proposals that could not be implemented so far would be looked into afresh. One such proposal includes greater regulatory clarity for M&A deals, under which Sebi plans to put in place new guidelines to define bright lines identifying the change of control in such transactions.
Under Sebi’s Takeover Regulations, the definition of ‘control’ is based on certain defined principles rather than on rules and there have been cases when a multitude of opinion have given rise to different assessments of ‘control’ over a listed company, a senior official said.
To deal with such cases, the regulator has decided to define certain bright lines for identifying the control, he added. A bright-line rule or a bright-line test generally refers to a simple and basic standard that can be applied to remove ambiguity and resolve contentious issues.
In cases of mergers and acquisitions, an acquirer or any other entity would be considered to be gaining control of the target company if it fulfils the bright line tests with regard to acquisition of voting rights, control over operations and influence in board decisions.
There have been many cases, including the much-talked about Jet-Etihad deal, when the issue of control was debated a lot and it was felt that Sebi needs to put in place specific guidelines defining bright lines to determine the control.
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