Key among these are the following five revisions: (i) the threshold triggering a mandatory open offer for a target's stock will be increased from 15% to 25% of the target's issued capital; (ii) the minimum size of such open offer will be 26% of the target's issued capital; (iii) all shareholders have to be given the same exit price and there can be no separate provision for non-compete fees; (iv) if competitive offers are made, the successful bidder can acquire shares of other bidders after the offer period without attracting any further open offer obligations; and (v) the target's board of directors will have to make a recommendation on any offer.
The SEBI board's press release does not go into how these new takeover regulations will operate vis-à-vis the antitrust regulations being administered by India's Competition Commission. During a subsequent press conference, SEBI's chairman did state that the two agencies were working to coordinate the application of their respective regulations, but he did not provide any further details on this coordination.
In addition to the takeover code changes, the SEBI board also approved a host of other changes that will affect documentation under the current 'Issue of Capital and Disclosure Requirements,' the regulation of the mutual funds industry, and the know-your-customer (KYC) procedures that apply for dealings with retail investors.
All of these changes will need to be incorporated into various revised regulations before they come into effect.