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October 6, 2001 		Feedback  
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India may hike limit on shares acquisition, says SEBI

The Securities and Exchange Board of India may hike the annual limit on additional shares major shareholders can buy in their companies without having to make a public offer, a senior official said on Saturday.

"We are discussing a proposal to increase the ceiling but it has not been approved as yet," said the SEBI official.

Currently, shareholders who own 15 per cent and more but less than 75 per cent in a company are allowed to buy up to a further five per cent of the company's shares annually without attracting the public offer provisions of the takeover code.

The public offer clause requires those acquiring to buy a minimum of another 20 per cent shares from other shareholders when the five per cent limit is exceeded.

Shareholders owning less than 15 per cent of a company's shares are allowed to buy up to 15 per cent before the public offer clause is invoked.

Local newspapers said on Saturday that SEBI, the capital market watchdog, has plans to double the creeping acquisition limit, or the maximum which the major shareholders are allowed to buy in a year without having to make a public offer.

This means that these shareholders may be allowed to freely purchase an additional 10 per cent each year without triggering the mandatory open offer provisions, a business daily said.

"The rider is that the new limit will be in force only for six months from the date of notification of the proposal which is in the process of being drafted and is expected to be notified next week," said the Business Standard without naming sources.

It said that the new limit when notified, will be valid till its review in March next year.

Analysts said the measure is aimed at boosting liquidity and lifting sentiment in Indian stockmarkets which is one of the worst performers in Asia this year.

The Sensex is down nearly 30 per cent from the start of the year, off an eight-year low struck last month.

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