There are some of the important clarifications from the Securities and Exchange Board of India (SEBI). Stock market regulator SEBI says creeping acquisitions for promoters holding 55% to 75% stake will be capped at 5%. It will review the shareholding pattern on the basis of March 2009 filings of all corporate and it may add or delete from this special exemption.  The issue was discussed at its board meeting in New Delhi on July 10.

Here is a verbatim transcript of Vivek Law’s comments on CNBC-TV18. Also watch the accompanying video.

These special norms were laid out by SEBI on October 30, 2008 given the environment then. In a nutshell, promoters and persons acting in concert that held between 55% and 75% were allowed to do a creeping acquisition of 5%. There were several misconceptions and several clarifications which the corporate world and legal fraternity had been seeking from the regulator. The crucial ones were––is this 5% an annual exercise; is it something that I can do once every year. SEBI has clarified that that’s not the case. It is a onetime 5%. It’s a cap of 5%, however, it has clarified it can be done in one or several tranches.

The other big issue was is the financial year linked––does that mean that March 31, 2009 onwards that limit of 5% goes away. SEBI has clarified that’s not the case. There is no specified time period within which one needs to do this 5%. It can be done as and when wanted and no time period has been fixed. So technically promoters can do it today post March 31, 2009 as well.

The other clarification that has come out from SEBI is that post 75% one cannot do this even if it were at 73% and one could go technically up to 78%––it will be capped-off at 75%.