Market regulator Securities and Exchange Board of India (Sebi) today relaxed the creeping acquisition norms and allowed promoters to annually raise their stake through the route to 75 per cent via open market purchases instead of 55 per cent earlier.
Creeping acquisition refers to the process through which promoters can increase stakes in their companies by buying up to five per cent of the equity in a year. Earlier, promoters were allowed to do so only till they reached 55 per cent of the compnay’s equity.
The late evening announcement, which came after the Bombay Stock Exchange’s benchmark Sensex fell below 8,000 Friday following an over 1,000-point intra-day fall and volatile trading, is aimed at boosting stock market sentiments.
Sebi, however, imposed conditions that such acquisitions could be done only though open market operations and not via bulk, block deal, or through preferential offer.
Sebi also said that promoters would not require permission if their holding in the firm were to increase 5 per cent in the event of a buyback of shares. Earlier they had to seek the approval of Sebi’s takeover panel.
“It has now been decided to automatically exempt increase/consolidation up to 5 per cent per annum as a result of buyback by a company,’’ the press statement said.
The relaxation comes at a time when overseas investors have sold close to $13 billion in Indian stocks this year with some companies losing as much as 70 per cent of their value.
Source... Business Standard...
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