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Bhagwati panel for shareholders nod for mgmt revamp

The takeover code committee appointed by Securities and Exchange Board of India has said that any change in management control of a company could be brought about only by a special resolution passed by shareholders at general meeting with a provision for postal ballot.

In its report presented to Sebi, the committee, under the chairmanship of Justice P N Bhagwati, said the exemption from provisions of takeover code for preferential allotment of securities should be on the condition that any resolution should provide for postal ballot to ensure greater shareholder participation.

The committee, which reviewed the provisions of the Sebi's takeover regulations of 1997, said in its report that any acquisition of shares in breach of the takeover regulations should be declared null and void.

In cases, where there have been violations of various provisions of the code, the market regulator should ask for appointment of a merchant banker to divest the shares, acquired in breach of the takeover code, either through public auction or any market mechanism.

Profits from such proceeds should be put into Investor Protection Fund, the committee said.

Referring to the disclosures, the panel said the acquirer should disclose at every stage when he crosses the limit of five, 10 and 14 per cent. When holdings crosses 15 per cent, purchase and sales at every two per cent level should be disclosed to the target company as well as to the concerned exchanges, the committee added.

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