MC EXCLUSIVE Sebi panel recommends open offer process may be faster with quicker payout to investors

Open offer process may be faster in future, Sebi panel recommends 20 days reduction in timelines

Companies may be able to process the open offer quicker and in efficient manner, as a regulatory panel has suggested tighter timelines for various processes. As per the sources, in its draft submitted to Sebi, the Takeover Review Panel has suggested reduction in various timelines related to the open offer. Currently, the overall timeline for completing an open offer is 62 working days.  Suggestions if implemented can reduce open offer process to 42 working days, ensuring faster completion and quicker pay-outs to shareholders. Moneycontrol had previously reported the other regulatory changes proposed by the Takeover Review Panel of Sebi.  The panel has also recommended reduction of timelines for various processes.

The timelines suggested by Takeover Regulations Review panel for each activity have been recommended to be reduced.

Faster Publication and Filing Process

From the date of public announcement, the Detailed Public Statement (DPS) must be published within 3 working days against the current 5 working days. Similarly, Draft Letter of Offer (DLOF) must be filed with Sebi within 5 working days from the DPS against the 10 working days’ time, currently. Linking escrow deposit to the filing of the DLOF instead of the DPS, allowing the deposit to be made 2 working days before the DLOF filing. The rationale is key details such as offer size, price, and acquirer information are already available in the public announcement. Since additional disclosures in DPS and DLOF are incremental, timelines can be compressed without compromising investor interests.

Dispatch of Offer Letters to be quicker
Currently, the Letter of Offer (LOF) must be dispatched to eligible shareholders within 7  working days of Sebi’s comments on the DLOF. Sebi panel proposes reducing this timeline to 5 working days, leveraging advancements in electronic communication. Panel is of the view that, with most shares now held in demat form, LOFs can be sent through email, eliminating logistical delays.

A shorter Tendering Period
The tendering period for shareholders to submit their shares currently stands at 10 working days. Panel analysed the data and found over 91 percent of shares in open offers and 92 percent in buy-backs are tendered during the last 5 days of the period. Hence, panel proposed reducing the tendering period to 5 working days. A pre-offer advertisement, issued a day before the tendering starts, will continue to keep investors informed about offer price revisions.

Faster Payments to investors  

Under the existing framework, acquirers have 10 working days after the tendering period to pay shareholders who have accepted the offer. Sebi panel now recommends reducing this to 5 working days, citing technological advancements such as T+1 settlement and the streamlined process. Since shares remain blocked in the shareholder’s demat account until settlement, risks are minimized.

Quicker Post-Offer Public Announcements

Post-offer advertisements, currently due within 5 working days of the offer closing, will now need to be published within 2 working days, as all necessary data is available immediately after closure.

How the proposal will help

If accepted and implemented by Sebi, these measures will reduce the overall open offer timeline by 20 working days. The revised structure aims to align open offer processes with delisting timelines. Speed up shareholder pay-outs. Enhance market efficiency. With retail investor participation at record highs, these changes are expected to instill greater confidence and convenience in corporate actions such as acquisitions and buy-backs.

Sebi’s takeover panel proposal marks a significant shift toward digitisation and operational efficiency in capital markets. By cutting down redundant delays and leveraging technology for faster communication and settlement, the regulator seeks to make tender offers more transparent, swift, and investor-centric.

It’s a draft report and the Sebi has not yet made the report public for consultation. As a process of regulation making Sebi seeks public feedback before final implementation.