India has a detailed set of takeover regulations for listed Indian companies. But last year, the Securities and Exchange Board of India (Sebi), appointed an advisory committee to find out whether the current regulations can be improved. The committee recently came out with a set of suggested norms seeking to entirely replace the existing regulations. While the recommendations seek to bring more fairness to shareholders of listed companies, if implemented, they will have the unintended consequence of stunting the market for control, harming, not benefiting that class of shareholders. While the report makes some progress in certain areas, it builds on an imported but inappropriate philosophical foundation. Sebi should not accept the recommendations of the committee and lose a decade and a half of court determined jurisprudence on the subject.
The present law
Before analysing the recommendations, it would be useful to briefly summarise the Sebi (Substantial Acquisition of Shares and...