SEBI issues disclosure norms for IDR rights offering

"Every listed issuer offering IDRs through a rights issue shall prepare offer documents in accordance with the home country requirements," SEBI said in a circular

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) on Friday said companies offering Indian Depository Receipts (IDRs) through rights issue have to file offer document as per the prevailing norms in the country, reports PTI.

Through a notification, SEBI on Friday amended the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, by adding a chapter relating to rights issue of Indian Depository Receipts (IDRs).

"Every listed issuer offering IDRs through a rights issue shall prepare offer documents in accordance with the home country requirements," SEBI said in a circular.

IDRs are the instruments through which a foreign company raises capital in the country by offering underlying shares to domestic investors.

So far Standard Chartered is the only foreign company which has come out with an IDR issue and the SEBI circular would provide them with guidelines for coming out with a rights offer.

Through a rights issue, a company raises funds by allotting shares to its existing shareholders.

SEBI further said that if the issuing company is in breach of the IDR listing agreement then it cannot come out with a rights offering.

The issuing company would have to inform the stock exchange where its existing IDR is already listed, about the rights issue. Further, the IDRs issued by way of rights issue would have to be listed on one of those stock exchanges in the country.

On fast track issue, the regulator said if the issuer had no disagreement with the stock exchange on the provisions of deposit agreements and listing agreements for at least three years, without any pending show-cause notices or prosecution proceedings, the issuer can get approval for the same.

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Fall further: Weekly Market Report

Slide may continue after a small bounce

Events in the US and Europe, leading to worries of another recession, pulled down markets around the world this week, and India was no exception. The 'Operation Twist' announced by the US Federal Reserve to boost the economy and the debt imbroglio in Europe were seen as the main reasons for the sharp decline in the markets. The domestic market settled sharply lower with the Sensex tumbling 5% and the Nifty tanking 4% in the week.

Weak global cues pulled the market down on Monday. However, it staged a splendid recovery the next day on institutional buying. The market closed flat with a negative bias on Wednesday as investors all over the world waited for signals from the US Fed. The risks associated with the negative outlook for the US economy resulted in the domestic benchmarks recording their biggest one-day fall in more than two years on Thursday. The events of Wednesday still played on investors' minds, resulting in the market closing lower on Friday.

Finally, the Sensex plunged 772 points to close the week at 16,162 and the Nifty declined 217 points to settle at 4,868. The Nifty is likely to see a small bounce-back after finding a support at 4,800. However, analysts are of the view that the market will be driven by global events in the absence of any domestic triggers.

The BSE consumer durables index was the lone sectoral gainer (up 1%), while BSE Capital Goods (down 7%) and BSE Metal (down 6%) were the top losers.

The gainers in the Sensex list were Tata Power and State Bank of India (up 1% each). Larsen & Toubro (down 10%), Tata Motors, Sterlite Industries (down 9% each), Hindalco Industries (down 8%) and Hero MotoCorp (down 7%) were the key losers on the benchmark.

The Nifty leaders were Reliance Power, ACC (up 3% each), Grasim Industries (up 2%), Ambuja Cement and Tata Power (up 1% each). The major laggards were L&T (down 10%), Tata Motors, Sterlite Ind (down 9% each), Reliance Infrastructure and Sesa Goa (down 8% each).

Food inflation fell to 8.84% in the week ended 10th September from 9.47% in the previous week. Experts opine that despite the latest fall, pressure on the food price front will continue to keep the government and the RBI (the Reserve Bank of India) on their toes.

Nearly two weeks after prohibiting onion exports, the Empowered Group of Ministers (EGoM) of Food on Tuesday lifted the ban, forced by the farmers' stir in Maharashtra-the main producing region. The EGoM, however, decided to fix the minimum export price of onion at a high level of $475 a tonne as a precautionary measure to discourage exports.

In corporate news, state-owned NMDC has reached an agreement to purchase a 50% stake in Australia-based Legacy Iron Ore as a cornerstone investor for nearly A$19 million. The deal is the first foreign acquisition for the minerals explorer, which has been scouting for natural resources abroad in countries like Russia, the United States, Afghanistan, Uzbekistan, Canada and South Africa, among other countries.

On the international front, finance ministers and heads of central banks across the world gathered in Washington for the International Monetary Fund's annual meeting and expressed concerns that the persistent debt issues in Europe and the economic slowdown in the US could lead to a second recession in three years.

Republicans in the US House of Representatives came together on Friday to approve a crucial spending Bill, but the prospect of a government shutdown loomed as Democrats said it would go nowhere in the Senate. The Bill would keep the government running through 18th November and provide $3.65 billion for disaster relief in one of the most extreme years for weather in US history.

Earlier this week, the Federal Open Market Committee, unveiled 'Operation Twist' through which it would purchase $400 billion of long-term debt and sell an equal amount of short-term treasuries, thus extending the average maturities of treasuries in its portfolio. The Fed added that although it foresaw some pickup in the pace of recovery shortly, it expected the unemployment rate, currently at 9.1%, to 'decline only gradually.'

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SEBI notifies new takeover norms; open offer trigger at 25%

The new norms, which will come into effect from next month, mark an increase in the open offer size for public shareholders from 20% currently. Also the trigger for making such an offer has been raised from 15% under the existing regulations

Mumbai: The Securities and Exchange Boar of India (SEBI) on Friday notified the new takeover rule under which an entity buying 25% stake in a listed firm will have to mandatorily make an open offer to buy an additional 26% shares from the public, reports PTI.

The new norms mark an increase in the open offer size for public shareholders from 20% currently. Also the trigger for making such an offer has been raised from 15% under the existing regulations.

"No acquirer shall acquire shares in a target company which taken together with shares or voting rights held by him... entitle them to exercise 25% or more of the voting rights... unless the acquirer makes a public announcement of an open offer," it said.

The new regulations, titled as 'The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011', will come into effect from the next month.

Under the new rules, there would be no separate provision for non-compete fees, which allows promoters to higher price than the public shareholders, and all shareholders should be given the exit option at the same price.

Partly accepting the recommendations of a SEBI-appointed panel on the matter, the regulator also decided to abolish the non-compete fees that acquirers generally pay to the sellers in merger and acquisition deals.

The notification follows the decision taken at SEBI's board meeting in July.

Last year, a SEBI panel on new takeover regulation had recommended an open offer for buying up to 100% in the target company, while suggesting an increase in the trigger limit to 25%.

While the recommendation on trigger was accepted, the suggestion for offer size has been kept lower due to intense opposition from industry and other market participants.

The panel had opined against non-compete fees for promoters which often worked out as high as 25% of the deal value.

SEBI, as part of the new code, allowed voluntary offers subject to certain conditions.

Regarding control and offer size, SEBI said that the existing definition of control would be retained and the minimum offer size shall be increased to 26% of the target company.

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