tag:blogger.com,1999:blog-3202774368551476669.post970036418274870097..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: New 5% creeping acquisition permission for 55-75% holders to go soon?!Umakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-3202774368551476669.post-19318238112869682892009-08-25T16:40:07.585+05:302009-08-25T16:40:07.585+05:30why is the aforesaid acquisition of upto 5% calcul...why is the aforesaid acquisition of upto 5% calculated by aggregating all purchases without provided the aquire/promoter the benefit of netting the aggregate sales?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-33536835882865948932009-02-19T00:48:00.000+05:302009-02-19T00:48:00.000+05:30Thank you for the insights. In doing some additio...Thank you for the insights. In doing some additional analysis, is it true that the creeping acquisition permission is only a one time 5% purchase vs. 5% per annum so long as ownership is less than 75%?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-23606381788229953362008-11-06T15:34:00.000+05:302008-11-06T15:34:00.000+05:30Thanks, Somasekhar, for your pertinent comments an...Thanks, Somasekhar, for your pertinent comments and I agree with your concerns about the newspaper report.<BR/><BR/>The timing of the report is also strange. SEBI amends the law on one day and then there is a “leaked” demand to reverse it two days later. In fact, considering other absurdities, I could not decipher whether it was a serious report or a tongue-in-cheek piece with understated irony – I think it was the former, which probably prompted Sandeep to use the word “riot” (see 1st comment above). <BR/><BR/>I also agree with you that preferential allotment should have been a permitted increase route as it too should evoke confidence – after all, the added advantage is that the money goes into the Company and not possibly to panic-driven, cash-strapped FIIs who are selling at any price on the stock market! (though SEBI wants it to go to retail investors). <BR/><BR/>One incidental point regarding preferential allotment as an alternative mode of increasing holding is that in many cases the formula of minimum pricing may come in the way. The formula envisages taking six months average price into account which may be far higher than current prices, considering the almost 50-60% fall generally in stock market in last few months. In fact, many Promoters who had subscribed to warrants in last 1 year or so are already considering to let them lapse – after all current market prices are far cheaper even if the 10% deposit is forfeited (subject of course to issues of insider trading, etc.)!<BR/><BR/>As regards your article in BS on the buyback issue, which was very timely as you wrote in the very first Monday following the announcement, it was still too late for SEBI who must be in a real hurry and who passed the amendment in just 3 days of its announcement! The buyback/takeover controversy thus remains live.<BR/><BR/>Thanks again!<BR/><BR/>- JayantCA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-84115300275932055932008-11-06T14:27:00.000+05:302008-11-06T14:27:00.000+05:30I would discount the reasons in newspaper reports....I would discount the reasons in newspaper reports. The amendments to increase the creeping acquisition scope for market purchases seems to have been aimed by the government to boost market purchases and bolster stock price discovery in the market. <BR/><BR/>However, there are several reasons for why such a collateral objective would not be smoothly met. People holding more than 55% would more of less be "promoters". Such persons would invariably be in possession of unpublished price sensitive information and would find it very difficult to effect day-to-day market purchases. Indeed large corporate houses that do not want any trouble whatsoever with the regulators have not availed of the creeping acquisition limits. Therefore, the government's objective would not be immediately met.<BR/><BR/>Another reason for reviewing this amendment ought to be not to restrict the mode of such creeping acquisition merely to market purchases. Even if a substantial shareholder infuses money into the company through a preferential allotment, it would equally bolster investor confidence and therefore, in fact, meet the government's apparent objective of increasing investor confidence in the equity market. The proviso restricting the ability to creep up by 5% beyond 55% was far too restrictive and ran counter to the seeming objective of infusing more investor confidence in the moribund equity market.<BR/><BR/>As for the restriction on buy-back, I had commented on it in my last column in the Business Standard. The issues there raise a separate story altogether.Somasekhar Sundaresanhttps://www.blogger.com/profile/04744606756966518697noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-80502107635468484002008-11-05T14:59:00.000+05:302008-11-05T14:59:00.000+05:30The finance ministry is a riot these days. Sandeep...The finance ministry is a riot these days. SandeepSandeep Parekhhttps://www.blogger.com/profile/08840653819247769331noreply@blogger.com