Sebi eases takeover rules for lenders acquiring stake in stressed assets

Market regulator Securities and Exchange Board of India (Sebi) has notified relaxed norms for lenders to acquire stake in distressed listed companies by exempting them from making open offers for shareholders.

Sebi takeover rules normally require investors acquiring stake in a company beyond the 25 per cent trigger to make an openoffer to shareholders to acquire a majority stake in the company.

The relaxation for lenders will, however, be subject to certain conditions, including shareholders' approval of the stake acquisition by way of special resolution.

The Sebi decision will support the efforts of the government and the Reserve Bank of India to tackle the menace of bad loans, amounting to over Rs8,00,000 crore.

Besides, the regulator has eased norms for restructuring in stressed companies that are listed on exchanges as well as resolution plans approved under the Insolvency and Bankruptcy Code, Sebi said in a notification.

The move is aimed at facilitating turnaround of listed companies in distress which will benefit their shareholders and lenders. Currently, relaxations from preferential issue requirements and open offer obligations are available for lenders undertaking restructuring of distressed listed companies under the Strategic Debt Restructuring (SDR) scheme.

There have been representations made to Sebi that lenders that have acquired shares and propose to divest them to new investors faced difficulties as the latter have to make an open offer. Such offers further reduce the funds available for investment in the company concerned. In view of the concerns raised, Sebi has extended the relaxations to new investors acquiring shares in distressed companies pursuant to such restructuring schemes.