The Securities and Exchange Board of India is expected to take up two critical issues at a board meeting scheduled February 2 (Monday). One of them concerns raising margins that promoters must pay for optionally convertible warrants and the other on waiving the open-offer pricing rule for potential buyers of scam-hit Satyam [Get Quote] Computer.

Promoters issuing optionally convertible warrants to themselves currently have to deposit 10 per cent of the value of the warrants as margin. Optionally convertible warrants give promoters an option to convert warrants into shares at a pre-determined price.

Promoters generally convert the warrants in a rising market but they tend to let them lapse when markets fall, as a result of which the 10 per cent margin is also forfeited.

Sebi's secondary market advisory committee recently recommended that the 10 per cent margin be raised to 25 per cent so that it becomes costlier for promoters to let the option lapse. The significance of the move is that when promoters issue warrants to themselves, lay investors consider it a sign of confidence in the company and the price at which the warrants are to be converted becomes a benchmark for the share in the market.

On the Satyam issue, prospective bidders such as Larsen & Toubro, iGate and HCL [Get Quote] have asked for an exemption from the current open offer pricing rule of the last six months' average price.

In Satyam's case, this price would come to Rs 263. 89. However, between December 17, when the company withdrew its controversial bid to buy two promoter-owned firms, and January 30, the average price dropped to Rs 93.58.

Between January 7, when founder Ramalinga Raju confessed to fraud, and January 30, the average price dropped to Rs 34.95.