SEBI’s Recent Securities Markets Announcements

week, SEBI took certain decisions
in the form of minor reforms to the securities markets, both primary and
As part
of a process that began nearly 3 years ago, SEBI has further liberalized the
process for dilution of promoter shareholding in listed companies, since a
deadline of June 2013 has been set to ensure minimum level of public
shareholding in listed companies. This time, some measures have been adopted to
make the “offer for sale through stock exchange mechanism” more efficient. While
such measures may make such options more attractive, it is not clear if SEBI’s
objective can be achieved within the timeframe given that several companies are
yet to comply with the minimum public shareholding norms. It looks likely that
SEBI’s enforcement mechanism and its determination in ensuring compliance will
be put to rigorous test in a few months.
changes have also been suggested to SEBI’s Takeover Regulations that were
promulgated in 2011. Several of them are clarificatory in nature or intended to
address discrepancies or the lack of clarity that was experienced ever since
the new regulations came into effect. However, one of the long standing
critiques of the Takeover Regulations pertaining to their lack of appropriate
fit with the delisting process has not been addressed in this round despite
assurances from SEBI to relook at this issue.

Another announcement
that came last week relates to the implementation of the curbs imposed on acquisition
of shares by employee trusts in the secondary markets. SEBI’s decision and
rationale were analyzed previously (
Therefore, now any form of employee stock option or share purchase scheme must
necessarily involve the issue of new shares from the company.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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