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Satyam saga: SEBI to amend open offer rules

This article was posted on Feb 2, 2009 and is filed under Press Releases

MUMBAI: India’s stock market regulator SEBI said on Monday it would amend its regulations after it was approached by Satyam Computer Service’s government-appointed board for some exemptions from open offer rules, but gave no timeframe. “We will amend our regulations through guidelines to enable a transparent process for arriving at a price in case of such acquisitions,” C B Bhave, chairman of Securities and Exchange Board of India (SEBI), told reporters after a board meeting.

Bhave said rather than create a one-off exemption for fraud-hit Satyam, the regulator would amend its regulations.

“We must have a mechanism to deal with abnormal cases,” he said. Under India’s takeover code, an investor
who acquires 15 percent of a company needs to make an open offer for another 20 percent at a price which is not less than the average share price of the previous six months.

Satyam’s share have fallen sharply since mid-December, first on a planned deal to buy companies related to the founders and then after revelations in early January of massive accounting fraud.

The six-month rule meant a buyer of more than 15 percent of Satyam would be have to make an open offer at a price almost six times Monday’s closing price of 57.60.

Leading engineering and construction firm Larsen & Toubro has built up a 12 percent stake to be the biggest shareholder in Satyam.

source: Economictimes

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