Takeover Makeover

This week, India announced a complete makeover of its takeover rules. SEBI has accepted most of the recommendations made by the Takeover Regulations Advisory Committee (TRAC) last year. 

India's new takeover regulations will raise the substantial acquisition trigger to 25% followed by a 26% open offer. SEBI rejected the TRAC proposal of a 100% mandatory open offer.  But agreed to do away with the up to 25% non-compete fee to promoters- thereby giving all shareholders the opportunity to exit at the same price. That price will now be determined via a longer look-back period and a more current volume-weighted market price.
As proposed by TRAC, shareholders with a more than 25% stake will be allowed to creep at 5% per fiscal all the way to 75% or use a minimum 10% voluntary offer to consolidate their position. The rules for competitive offers, indirect acquisitions and exemptions will also change and target boards will have to mandatorily make recommendations on the acquirer