See no change in takeover norms by Sebi: Finsec Law

Sebi chairman UK Sinha today warned against violation of public shareholding norms. The market regulator added that the government is committed to ensuring that public sector companies comply with the minimum public shareholding norms and will not be seeking any extension. It has also decided to tweak takeover and OFS norms.

Also read: Sebi seeks more details on Diageo's United Spirits offer

According to Sandeep Parekh, founder, Finsec Law Advisors, Sebi's announcement on takeover norm is a just clarification and not much of a modification.

"The 1997 takeover law is reasonably well-established practice. The trigger date is the date of the agreement and not the purchase date of the shares. This law has been accepted for last several years," he added.

Below is the edited transcript of his interview to CNBC-TV18

Q: Today, Securities and Exchange Board of India (SEBI) chief came out. He has announced how the takeover norms are going to be tweaked. What it could mean for the United Spirits (USL)-Diageo deal? What do you make of it?

A: As far as the takeover modification is concerned, it is not really so much of a modification. I think it has been a reasonably well-established practice even under the old regulation. That was the 1997 regulation. The trigger date is the date of the agreement and not the purchase date of the shares. So, I think it is a well-established kind of understanding of the law, which has been accepted for the last several years.

Q: So clarification – is what you are calling it?

A: Right.

Q: So given this clarification now coming in from SEBI is this a green signal for USL-Diageo, ofcourse pending what the Competition Commission of India (CCI) will decide?

A: Yes, seems like that. Also there are some other issues, which came out in the media regarding Put and Call options. So, I guess subject to that it is probably going to go ahead.

Q: The tweaking that has been announced by UK Sinha today. What did you make of the changes? 

A: I think visibility of the order book is the good idea because it ends up being a fairly complex process if people understand what and how the price is moving. It is better for people’s comfort, both retail and institutional. To know how the order book is building up and what are the price points. That’s the good development.

On the margins, it is debatable. They have provided these two routes one for 100 percent margin, other for zero percent margins.

So, it is kind of tweaking things at the margins. I am not sure I support or oppose the changes. However, I am sure there have been some issues with couple of institutional investors and they wanted this. So, it is probably nothing which is great or bad.