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The Securities and Exchange Board of India (SEBI) has mooted a proposal to allow sovereign wealth funds to pick up a 20 per cent stake in an entity without invoking an open offer.
The stake buy should not lead to a change in management control. All this would be applicable on a case-to-case basis.
Sovereign wealth funds are state-owned investment funds that consist of all kinds of asset classes — debt, equity, commodities, and the like. This proposal was made at the SEBI board meeting on March 25.
The regulator proposes to insert a new regulation 3A under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, for this purpose.
The amendment is proposed by the SEBI under intimation from the Ministry of Finance to accommodate the Comprehensive Economic Cooperation Treaty agreement signed by India.
It recognises sovereign wealth funds as independent of each other for the purpose of application of the SEBI regulations and guidelines.
The move is a step towards harmonising extant regulation with the country's international agreements and commitments.
The SEBI's board of directors need to approve the proposal and to authorise the Chairman to take the necessary steps to give effect to the decision of the board.
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