SEBI restricts exemption from open offers to banks, financial institutions

Marketing & Finance

Such exemptions will not be available for acquisition of shares by persons other than aforesaid lenders by way of allotment by the target company or purchase from lenders, SEBI said.

mutual funds, MF, debt mutual funds, debt funds, debt MFs, Securities and Exchange Board of India, SEBI, new SEBI guidelines on debt mutual funds, IL&FS crisis, rating agencies, AMFI, AMCs, Mutual Fund sahi haiThe revised measure is likely to help loan resolution cases where banks may be looking at converting their debt into equity.

Markets regulator Securities and Exchange Board of India (SEBI) on Friday said open offer requirements for corporate debt restructuring will now be restricted to scheduled commercial banks and all-India financial institutions. The SEBI said that restricting exemptions from open offers is prescribed through a resolution plan approved under the Insolvency and Bankruptcy Code (IBC), the Indian Express reported.

“Such exemptions will not be available for acquisition of shares by persons other than aforesaid lenders by way of allotment by the target company or purchase from lenders,” SEBI said in a statement following its board meeting on Friday.

The revised measure is likely to help loan resolution cases, for instance, Rs 2,500-crore resolution plan for the beleaguered carrier Jet Airways, where banks may be looking at converting their debt into equity.

An open offer is required by a company or an investor looking to acquire 26 per cent from public shareholders over and above 25 per cent stake being acquired to ensure a fair deal to existing investors in the target company. However, the exemption, approved by a ‘Competent Authority’, that was so far given to the company or investor is now removed.

“Takeover Regulations provide for exemption from open offer for any acquisition pursuant to a scheme of arrangement/reconstruction pursuant to an order of a court or a tribunal or a competent authority under any law or regulation, Indian or foreign. The Board has approved that the reference to approval by “Competent Authority” in the Takeover Regulations shall be deleted,” it said.

The board meeting was addressed by the finance minister Arun Jaitley.

The SEBI also revised norms for investors investing startups to get accredited. Investors with a demat account will now have to apply to the stock exchanges or depositories for the accredited investors (AI) status for SEBI’s Innovators Growth Platform (IGP).

The regulator had renamed its Institutional Trading Platform as IGP in December 2018 along with measures introduced to boost startup listing. SEBI had launched the trading platform in 2015 to facilitate listings of startups in sectors including e-commerce, data analytics, biotechnology etc. However, it failed to attract startups to list themselves.

The SEBI would reportedly notify the process details for AI status later.

Leave a Reply

Your email address will not be published. Required fields are marked *