"The committee met to raise the issues with regard to the takeover code which will subsequently be discussed in a meeting slated for August 6 and 7", said Sebi chairman, DR Mehta.

The issues will now be circulated among various members of the committee, various chambers, investor associations, related intermediaries and others, for a review of the issues and any other issues which might be recommended by these members will be discussed in the August meeting.

A plethora of issues ranging from the procedures that need to be outlined for reference of cases to the takeover panel, consolidation of holdings, the applicability of the regulations and the new definitions that should come into place, were discussed. Under the topic of consolidation of holdings, the issues raised were: whether the creepingacquisition limit be raised for persons holding between 10 per cent and 51 per cent and should the persons in control be allowed to consolidate beyond 2 per cent creep limit through open offers without the requirement of a minimum offer of 20 per cent. For persons holding 51 per cent and above, the issues discussed were whether they should also be allowed to acquire through the creeping route and whether acquisitions by them should be totally outside the purview of the takeover regulations.

Whether there a need to give a draft public announcement to target company in advance, was also discussed. The measure would have to take into account the fact that the target company may take steps to foil the bid.

Issues pertaining to submission of the draft letter of offer to Sebi were also discussed. Should Sebi be empowered to call for an explanation/filing of revised submission of the draft and if so, whether the 21 day period to be reckoned from the date of such resubmission; should Sebi have the powers toreschedule date of opening/closure in cases where the offer becomes subjudice or involves some investigations by Sebi etc, were the issues discussed under this category.

As regards offer price, it was discussed whether the provisions of the Regulations intended to cover only minimum offer price or the actual offer price; how is the price on a partly paid shares to be reckoned especially in cases where the offer price for fully paid up shares itself is lower than the amount remaining to be paid on partly paid shares; would the price include mode of payment and can change in mode amount to change in terms of the offer.

On the issue of conditional offers, it was discussed whether such an offer be made for less than 20 per cent; can an acquirer make an offer conditional as to acceptances, when he is obligated to make a minimum offer of 20 per cent and should there be a distinction between obligated offers and non-obligated offers and prescribe minimum offer size only for obligated offers.

Clear definitionson the acquirer (does this include person acting in concert), voting rights (is it proportionate to number of shares or is it with reference to amount paid up on an equity share), persons deemed acting in concert (should it continue to include FIIs with sub-accounts even though each sub-account is an independent account), offer period, promoter, public shareholding and shares (would this include redeemable preference shares) were also proposed to be addressed. On the issue of obligations of a target company, it was discussed when an issue of capital be said to have been made, should it be the date of the AGM resolution authorising issue of capital or the date of the board resolution or the date of the prospectus etc. How could a target company be precluded from issuing shares etc in such a manner as would foil the bid or frustrate it, was also discussed.

As regards competitive bids, it was discussed whether it would be more desirable if the opening dates of the competing offers is determined after receiptof the requisite approvals by competing parties. Should there be a provision for the competitive bidder also to either revise or withdraw after the first bidder had revised an offer after a competitive bid. Whether the provisions relating to revision in offer price vis-a-vis the market purchases requires any revision was also discussed.

Similarly, whether the provision for market purchases after the public announcement should continue at all, was also debated upon.

On exchange of shares, the precautions that need to put in place when a listed company makes an offer to take over another company through exchange of shares, were discussed.

In such cases, can shareholders be taken for granted and what happens to the bid if the shareholders of the acquirer company do not approve of the acquisition. In this light, could shareholder approval be taken akin to statutory approvals and the offer allowed to be withdrawn if the approval does not come through, was discussed.

On inter group transfers, it wasdiscussed whether this should cover transfer from an individual promoter to a group company. It was also discussed whether this provision was too wide.

It was also discussed whether there is a need to exempt acquisition by pledgees other than banks and FIs. If so what are the safeguards that need to be built in to prevent camouflaged acquisition.

Deliberations were also carried out on the date of the proposed acquisition.Reporting requirements for certain acquisitions to which the Regulations are not applicable and the penalties to be imposed for non-disclosure of holding and acquisitions were also discussed.

On the timing of public announcements, working days should be clearly explained, it was felt.