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SEBI bars brokers from governing stock exchanges

The SEBI board, which met on Friday, also announced that none of its officials would be nominated on any of the exchanges to avoid 'any conflict of interest', Chairman D R Mehta told newspersons in Mumbai on Friday night after a four hour delayed meeting.

This decision follows in the aftermath of the March two stock market crisis when the regulator had to restrain the brokers on governing board of the Bombay Stock Exchange from acting as directors as well as government's decision to corporatise the exchanges.

Mehta said other administrative and legal modalities for corporatisation of the exchanges were being worked out.

On determining the cut-off date for open offer price for PSU divestment, Mehta said the cut-off date for frequently traded scrips of such PSUs would be the day on which the bids are opened by the government.

In case of infrequently trade PSU stocks, the highest price paid by a successful bidder under the share purchase agreement would be the minimum offer price for the public offer, he said.

The board also decided that the day on which government opens financial bids would be the reference date for determining if the shares of PSUs were traded frequently or infrequently in the last six months.

This would be instead of the date when the central government, after receiving the Cabinet approval, announces the name of the successful bidder, Mehta said.

Presently, a government company which acquires 15 per cent or more of shares/voting rights or control of a listed company is not required to make an open offer to buy a minimum of 20 per cent of shares from the public shareholders of the target company at a price determined in terms of the takeover regulations.

The board decided that this provision would continue except where a government company acquires 15 per cent or more of shares/voting rights or control of another listed PSU through the competitive bidding process of the Centre.

In the latter case, the PSU would be required to make an open offer for a minimum 20 per cent to the public shareholders at the price determined in terms of the takeover regulations.

This has been done with a view to provide a level playing field amongst bidders in the competitive bidding process of a listed PSU by the Centre.

In a bid to boost the FII participation in the derivative market, SEBI said limits on their exposure would be brought on par with other trading members in all products.

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