• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Kripa Raman

Mumbai, Feb. 19 The Securities and Exchange Board of India (SEBI) is in the process of amending its Disclosure and Investor Protection guidelines to allow a preferential allotment of shares of Satyam Computer at a price that would fetch strategic investors for the company, it is reliably learnt.

The Company Law Board on Thursday allowed the Satyam board to make a preferential allotment of shares to an investor who would be chosen through a competitive price bid auction.

In the current circumstances, a preferential allotment of shares of Satyam would face the same hurdle that an open offer for shares in the company would (to overcome which the SEBI last week amended its Takeover regulations).

The pricing for both would have to take into account the market price of the scrip over the last six months.

The scrip having fallen drastically in January since the admission of a financial scam by its founder-promoter, a preferential allotment could turn out to be forbiddingly expensive for a buyer and Satyam may find no suitors at all.

An amendment to the DIP guidelines is relatively quick procedure as only ‘guidelines’ are involved, and not ‘regulations’ or `Acts’, said a legal expert. This amendment can be done by the simple means of issuing a circular.

Last week, the SEBI eased its takeover regulations, providing relaxation from strict compliance of provisions under Chapter III of the Takeover regulations. This chapter relates to, among other matters, the timing, pricing and size of open offers by acquiring companies.

The amendments to the takeover regulations currently are tailor-made for Satyam, said legal experts.

Only companies whose boards have been superseded and replaced by government would qualify to seek the exemptions.

The two Maytas companies, whose boards have also been dissolved by government, could potentially qualify for these exemptions.

In view of the extreme circumstances of Satyam, the plan appears to be to remove regulatory bottlenecks for quickly getting a suitable, eligible bidder who can continue the operations of the company, said another lawyer who appears in SEBI-related cases.

SEBI also amended the takeover regulations so that no public announcement for a competitive bid can be made after an acquirer has made a public announcement following relaxation in the takeover regulations granted to it.

This may not throw up the best price for Satyam, said legal experts. But since SEBI has to be satisfied that the competitive process for finding a buyer is transparent and fair, a second bidder would defeat this purpose, as the process would have to be repeated with the new bidder all over again.

Current regulations permit a public announcement from a competitive bidder within 21 days of the public announcement of the first or original bidder.

More Stories on : Preferential Allotments | Investor Protection | Regulatory Bodies & Rulings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line