Will minority shareholders' interests get further trampled on by the proposed changes to the takeover code, is a question worth asking. Many people think that the SEBI-appointed Achuthan Committee recommendations will tilt the scales even further in favour of promoters/acquirers with deep pockets.

At a recent interaction with corporates chaired by the Chief Economic Advisor to the Finance Ministry, Dr Kaushik Basu, India Inc did its best to further its interests on the proposed changes in the takeover code. But what was refreshing was the approach of the Institute of Chartered Accountants of India (ICAI) and the Ministry of Corporate Affairs.

The CA institute emerged as champion of minority shareholders, especially on issues such as non-compete fees and 100 per cent acquisition rule. It has said that non-compete fee should be shared with common shareholders and form part of the takeover price. The Corporate Affairs Ministry also supported this.

But India Inc is firmly against the proposal of doing away with the concept of non-compete fees.

Both the CA institute and the Ministry of Corporate Affairs also opposed the proposal to raise the initial acquisition threshold for a mandatory open offer to 25 per cent of the voting capital of the target company from the current 15 per cent.

Reasons: There will be hostile takeover threat to listed companies with lower promoter shareholding. Also, by maintaining a smaller trigger point of 15 per cent, investor interest and excitement in investment activity is maintained.

“This (increase in the trigger to 25 per cent) should not happen in our view because that would enable people to acquire up to 25 per cent without giving any benefit to the common shareholder. Even with 24.99 you are not giving any benefit to common shareholder and at the same time you are controlling the company”, said an ICAI Central Council member.

The Finance Ministry is yet to firm up its views on the Achuthan Committee recommendations on changes to the takeover code. But its recent move to hear the industry views on the report did come as a surprise to many in industry and regulatory circles. It is always good to hear the viewpoint of the industry as they could give some fresh perspective to the issues at hand.

For the Finance Ministry, it will be a tough choice between embracing global practices or settling for regulations finetuned to domestic situations.

To think global, but act local is what some in industry may want the Chief Economic Advisor, Dr Kaushik Basu to do.

In the recent interaction, Dr Basu is understood to have been particularly keen to know the global practice on various changes suggested by the Achuthan committee.

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