Cloud over Etihad plan for Jet as Sebi tightens rules
MUMBAI: The Securities and Exchange Board of India (Sebi) on Friday tightened the take over code and Issue of Capital and Disclosure Requirements( I CD R) for exemption from open offers, a decision that corporate lawyers said could impact Etihad Airways’ plans to invest in Jet Airways (India) Ltd.
The exemption from making an open offer in case of acquisition of more than 26% in a listed company will be allowed only to banks, lenders, and financial institutions.
“Exemption from open offer will not be allowed to any other person except the aforesaid lenders,” according to a Sebi statement issued after ameeting of its board on Friday.
Sebi also removed the “competent authority” clause for exemption from an open offer. Currently, an exemption is allowed from making an open offer to minority investors if there is a court or tribunal order or reference from a competent authority “under any law and regulation Indian or foreign”.
This will likely make the prospects of any fund in fusion by Etihad in Jet Airways difficult as the former was banking on an exemption for making an open offer under this clause, based on a reference from the aviation ministry and the directorate general of civil aviation (DGCA).
Now an exemption is only possible if the case is referred to the National Company Law Tribunal under the Insolvency and Bankruptcy Code.
“Now a reference from the ministry or a regulator may not be sufficient to get an exemption from an open offer under the proposed amendments. A court order or tribunal ruling that such an exemption from open offer to a private investor is in interest of the company/investors will allow exemption from an open offer,” said Tejesh Chitlangi, senior partner, IC Universal Legal.
Sebi also decided to reduce the fees it levies on intermediaries to lower their regulatory burden. The fees has been reduced by 33% for stock brokers, by 99% for commodity brokers, and for filling public issues by 50%.
Mint had first reported the proposed reduction in fees for intermediaries on February 13.
Sebi also finally cleared the decks for domestic institutional participation in the commodity derivatives markets and will amend mutual fund and portfolio management services regulations for these institutions to trade in commodity derivatives.
“Institutional participation will play an important role in adding liquidity and depth to the commodity derivatives market, leading to enhanced efficiency in price discovery and risk management. Moreover, this will provide the Indian investors easy access to a new asset class and cater to their diversified investment and trading needs,” said Mrugank Paranjape, chief executive officer (CEO), MCX.