In a recent board meeting SEBI considered and accepted most of the recommendations of the TRAC. Some of the major recommendations that has been accepted by SEBI includes the following:
-Initial trigger threshold increased to 25 % from the existing 15 %
-scrapping of non compete fee. (the issue of non compete fee has been discussed on this blog previously and is available here and here)
-In cases of competitive offers, the successful bidder can acquire shares of other bidder(s) after the offer period without attracting open offer obligations.
-Voluntary offers have been introduced subject to certain conditions.
-A recommendation on the offer by the Board of Target Company has been made mandatory.
The two important recommendations that has not been accepted in totality are:
-offer size increased from a minimum 20% to 26% of the total issued capital. It is to be noted that TRAC had recommended an offer size of 100%.
-existing definition of 'control' retained. TRAC had proposed a broader definition of 'control' i.e. not just the right but also the ability to manage the company and appoint majority directors.
A summary and initial reaction on the development is available here.