Press Trust of India
New Delhi, March 12: For better clarity on change of control in mergers and acquisitions, regulator Sebi Saturday decided to launch a public consultation for defining ‘control’ and proposed fixing 25 per cent voting rights as a threshold. In this regard, Sebi will initiate public consultation on bright line tests for acquiring control in a listed entity. The approval of the proposal by the Sebi board Saturday comes against the backdrop of instances of ambiguity and concerns over control in some listed entities.
During the meeting Saturday, the board approved the proposal for public consultation process regarding “bright line tests for acquisition of control under Sebi (SAST) Regulations, 2011”. The watchdog will come out with an illustrative list of protective rights that will not amount to acquisition of control and grant of such rights will be subject to obtaining public shareholders’ approval. “Considering the international practices and the current regulatory environment in India, the definition of control may be amended such that control is defined as the right or entitlement to exercise at least 25 per cent of voting rights of a company irrespective of whether such holding gives de facto control and/or the right to appoint a majority of the non-independent directors of a company,” the release said.
Meanwhile, the markets regulator also said it will introduce new products and allow more participants in the commodity derivatives market, a move which could pave the way for entry of banks and FPIs into the segment. It last year begun regulating the commodity derivatives market as well. The commodities market has been demanding for long the introduction of options to deepen the market. Besides, the industry has also been asking for allowing participation by banks and Foreign Portfolio Investors (FPIs), among others in the commodity markets. “To deepen the commodity futures market and to encourage new products and participants, Sebi has setup an advisory committee under Ramesh Chand, a member of Niti Aayog,” Sebi Chairman U K Sinha told reporters here.
He further said the committee has already done a meeting in this regard. Later in a statement issued after the board meeting, Sebi said that it plans to develop an integrated database on commodity derivatives, augment the supervision of the market and introduce new products and allow new participants. Finance Minister Arun Jaitley in Budget 2016-17 had said that the new derivative products will be developed by the Securities and Exchange Board of India (Sebi) in the commodity derivatives market.
