The SEBI Board will meet on July 28 to consider, for the first time, the Achuthan Committee's recommendations for instituting a new Takeover Code.

The Committee, which submitted its report to the capital market regulator last July, had sought raising the initial acquisition threshold for triggering mandatory open offers from the existing 15 per cent to 25 per cent.

Moreover, once the 25 per cent threshold is reached, the acquirer of the target company would have to make the open offer for the entire remaining 75 per cent shares. This is as against the current stipulation that limits the open offer size to only 20 per cent.

The Achuthan committee report forms part of the agenda of the July 28 SEBI Board meeting, official sources told Business Line . The Board was, in fact, slated to earlier meet on June 30 and discuss the Achuthan panel's report. But the meeting did not happen and was rescheduled to a later date.

Non-compete fees

Besides the 100 per cent open offer size rule, the Achuthan Committee had also proposed the abolition of non-compete fees to be paid by an acquirer to the target company's existing promoter.

While India Inc has been against the suggestion to do away with the non-compete fees, they have had mixed views on the open offer recommendations. The three apex chambers — CII, FICCI and Assocham — have supported raising the threshold trigger from 15 per cent to 25 per cent.

However, Assocham has sought capping the overall open offer level at 75 per cent, against the 100 per cent proposed by the Achuthan panel. FICCI, on its part, has pointed out that the limited access to acquisition finance in India makes it difficult for domestic acquirers to undertake 100 per cent buyouts. There is, therefore, a case to go in for a lower open offer limit.

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