Sebi forms a high-level panel to review corporate takeover rules

India’s capital markets regulator has formed a high-level panel to review corporate takeover rules, the first such anticipated overhaul in more than a decade, as Asia’s third-biggest economy seeks to establish a contemporary M&A regime that bakes in momentous changes spawned by the Global Financial Crisis and the emergence of new buyout modes undergirded by private-equity financing.

The 20-member committee will be headed by former Chief Justice of Punjab and Haryana High Court, Shiavax Jal Vazifdar.

“The committee will have to review everything. Jurisprudence has developed and fresh issues have come up,” said a person close to the development.

The takeover code was last reviewed by the Achuthan committee in 2009.

The new panel will have to review the current rules in the light of past judicial pronouncements and various informal guidelines issued by Sebi so far.

Some other members of the committee include Ankur Verma, senior vice president, Tata Sons; professor Umakanth Varottil, faculty of law, National University of Singapore; Sudhir Kumar Jha, head of legal, HDFC; Sunil Sanghai, founder of NovaDhruva Capital and Sundareswaran S, managing director, Morgan Stanley Financial Advisors.

The panel will have to advise the regulator on simplifying and strengthening the current norms by adopting appropriate global practices. The committee, which has representatives from stock exchanges and law firms, would also have to suggest measures to facilitate ease of doing business.

“The coming few years will likely see a bunch of M&A activity, including in the listed space. Financial sponsors, with large pools of capital to deploy on control transactions, are increasingly contributing to this listed M&A space,” said Vivek Gupta, partner and national head – M&A and Private Equity Tax, KPMG. “A review, therefore, must strike the right balance between provisions that are aimed at protecting the minority and those that keep us globally competitive in the public company takeover space.”

“A more objective control definition, particularly in the context of protective as opposed to participative rights, would be helpful,” Gupta said.

In 2011, when takeover regulations were overhauled based on the recommendations made by the late C Achuthan, former presiding officer of the Securities Appellate Tribunal (SAT), the regulator retained and continued the inherent and basic objectives of control highlighted by Justice PN Bhagwati. Justice Bhagwati had chaired the committee that reviewed the takeover code of 1997.