This was forcibly brought out in the on going tussle for Saurashtra Cement and Alcan-Sterlite fight for Indal, and has prompted rethinking on some of the regulations. Sebi has now appointed a committee to review the regulations. Above all, two points need to be given utmost importance.

Should an acquisition be permitted after the offer is closed? If yes, what are the safeguards available to the shareholders who have lodged the shares already with the other bidder? What is the sanctity of the closure of offer? Unless the rules for negotiated deals are reworked, FIs will be ina position to dictate terms. The other issue is preferential allotment.

A preferential offer should not be outside the purview of the takeover code. The equity dilution hurts basically non-management shareholders as the track record of managements in using funds to promote their own interest is quite impressive.

But it is unclear why problems have cropped up in the code despite the fact that we have so liberally borrowed from the takeover rules in the advanced countries. Perhaps we also need to study the disputes which their codes have given rise to, and incorporate the effect of legal decisions while formulating our code. Most importantly, however, protection from unwanted take-overs, through share buy backs, need to be introduced at the earliest.