Professionally-run cos may get separate normsuary

The takeover code is being amended, right? Here are Sebi’s focus areas as it takes a closer look at the existing code. It is seriously thinking of making public offers maddatory in cases where the foreign parent is acquired; of having a separate category of takeover provisions for professional companies where there is no clear promoter; of reviewing change of management control through preferential allotments; and of making it mandatory for MNCs making secondary market purchases to get minority shareholders’ approval. Once the Bhagwati panel on the takeover code has sufficiently studies these new provisions, they are likely to provide the contours of the new takeover code. The panel is meeting in Mumbai on Monday. Although top sebi sources say that they would like to finalise the code soon, it is not known whthere it will be finalised by tomorrow itself. According to top Sebi sources, the panel is looking closely at the issue of preferential allotments in companies where management control changes hands from one promoter to another. A view has been expressed that this a useful channel as it provides for the inflation of funds into the company. However, sale of stake to another promoter or preferential allotments at a higher price will be an area that Sebi wants to look at. Another major issue on Sebi’s agenda is whether to have separate takeover provisions for professionally run companies, where there is no clear promoter group. In such companies, the takeover code becomes difficult to enforce as it’s unclear who can purchase shares from the market or launch a counter offer. One provision under consideration is to fix a certain quantum of stake, around 20 per cent, above which it would be included in the category of a promoter group and below which separate provisions may apply. The Securities and Exchange Board of India (Sebi) is also looking at the issue of trading multi national companies (MNCs), which come in through the FDI route as 100 per cent subsidiaries and are not allowed to invest in the secondary markets. However, their sunsidiaries are allowed to buy in the Indian stock markets. In such cases, Sebi is considering making it mandatory to seek minority shareholders’ approval in the listed company if such a purchase is concluded. The MNC will not be allowed to vote in the resolution, according to Sebi sources. Another major change on the anvil is to make public offers mandatory in case where the foreign partent of a company in India is acquired. These are cases where the promoter holding is quite lang drawn and the holding stretches across two or three holding structures. In such a situation, if the foreign promoter is taken over then the immediate promoter of the company will be asked to make an open offer compulsorily. Sebi is also debating whether to increase the public offer size from the existing level of 20 per cent. Sebi feels that the takeover code has worked well and has created a lot of consolidation. There has been a view to increase the public offer to 36 per cent, which will take the holding to 51 per cent giving it a clear control of the target company. Although this provision will benefit investors as more of them will be able to sellout it will be detrimental to the turnover process because it will require much larger sums of money to make the public offer. Even while increasing the threshold for public offers, Sebi is veering around to the view that small investors will be given some preference in the procedure to enable them to get maximum advantage of the code. Source: the Economic Times Dated: 8 January, 2001

Eveready battery divn to be demerged in a month

Eveready Industries India (EIIL), which is in the midst of a massive revamp programme, including separation of its battery and tea businesses, is in final stages of demerging its battery division." Everything is expected to be in order within a month or so," executive vice-chairman and managing director Deepak Khaitan announced on Friday. Mr. Khaitan was speaking to newspersons after the company's extra-ordinary general meeting for sale of some tea estates. The company is working closely with ICICI on a restructuring plan aimed at reducing debt burden and interest outgo. The BM Khaitan group company has already announced its plans to amalgamate group company Bishnauth Tea Company with the parent company of the Williamson Magor group-- Eveready Industries. As per the terms amalgamation, Bishnauth Tea shareholder will get three EIIL shares for every four shares held. The company operates 25 tea estates of which 13 are in Assam and 12 in West Bengal. It has decided to sell those estates, which had become un-remunerative and the estate in Darjeeling and Dooars in West Bengal fell in this category, he said. EIIL has already finalised the sale of Matelli tea estate in Doars, jaitani tea estate and Glenburn tea estate. Addressing Eveready Industries EGM, chairman B million Khaitan said the decision to sell unremunerative tea estates and amalgamation of Bishnauth Tea with effect from April'00 will create one large entity with considerable presence in tea business and would improve profitability. The group is in talks to sell off the remaining tea estates falling in the category. Meanwhile, Bishnauth Tea also held its EGM today to obtain shareholders' approval for sale of some of its tea estates. Source: The Economic Times Dated: 23rd December 2000

Tata Sons exempted from open offer for Tata Elxsi

THE SECURITIES & Exchange Board of India has exempted Tata Sons from making an open offer with respect to its proposed acquisition of shares of Tata Elxsi from two of its group companies, Tata Engineering and Tata Industries. The acquisition is proposed to be made as a part of reorganisation of the investment portfolio amongst Tata companies, said a Sebi press release. These shares will be acquired in one or more tranches at the prevalent market price on a spot delivery basis. As the proposed acquisition would be inter se transfer amongst promoters, exemption sought by the acquirer was granted, added the release. The total share holding of Tata Companies in the target company will continue to remain the same even after the acquisition and it would not result in change in control