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BW Businessworld

Nuances Of Regulation

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The takeover norms of the Securities & Exchange Board of India (Sebi) need fine-tuning. That is what a recent verdict by Securities Appellate Tribunal (SAT) shows. The SAT ruling set aside a Sebi order asking Tata Tea to add Rs 9.64 to the Rs 140 per share for the 20 per cent stake-acquiring open offer made to shareholders of Mount Everest Mineral Water in July 2007. SAT accepted that Sebi had discretionary powers to decide on the genuineness of all contentions of non-compete payments and, if not, add it to the offer price in an open offer. However, it ruled in favour of Tata Tea stating its non-compete payment was proper.

Discretionary powers need to be replaced with objective criteria. For instance, Sebi can fix a lower than the presently-allowed limit of 25 per cent of non-compete fee to the acquisition amount above  which the acquiring company has to pay the same to the target company's shareholders.



Chennai aspires to become Mumbai. The Tamil Nadu government is developing a financial city on 180 acres at Sholinganallur and Perumbakkam near Chennai. Mooted by deputy chief minister M.K. Stalin, the project aims to attract banks, insurance companies, mutual funds and stock brokers to the city. KPMG is the consultant for the project.

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(This story was published in Businessworld Issue Dated 05-10-2009)

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