23 September 2009

Takeover regulations – new committee

SEBI has appointed a new advisory committee to advice SEBI on amendment to the takeover regulations. For sure there are many small things which need to be ironed out and couple of major issues which need closure, but here is my two bits of advice to the advisory committee, since they are seeking suggestions – please don’t change any of the numbers in the takeover regulations. Our takeover regulations have suffered totally random changes in the threshold limits of disclosure and compulsory tender offer over the years without any major changes in the philosophy – merely because one person thought that 2% was better than 5% and then another that the original 5% was better than 2%. The US law has not changed in over 40 years in their disclosure thresholds and we have been so trigger happy that we keep playing with numbers all the time, thinking we are smarter than our predecessors. Though that is possible, I’m not sure that is the case with the half dozen amendments in the regulations in the past decade. Can the committee recommend that the numbers not be changed for the next 20 years at least?

I am always amused at how the media tries to preempt other media. One media person I spoke to said that even before the chairman of the takeover advisory committee received a formal invite to chair the committee, experts were talking about what the amendments are going to be based on their recommendations. Reminds me of two media channels last month who claimed they had confirmed that the deceased chief minister of Andhra Pradesh was in fact alive after a chopper crash and people had in fact spoken to him. They wanted to be the first ones to report his survival – just in case…

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