However, Federation of Indian Chambers of Commerce and Industry (Ficci) has said that Arun Bajoria's shares in Bombay Dyeing cannot be frozen if these have been acquired in Continued on Back Page Apex bodies seek change in takeover code conformity with the takeover code.

"Existing rules and guidelines of Sebi cannot be set aside while judging the claims of Arun Bajoria. At the same time, an atmosphere of hostile takeovers should not be encouraged. The 5 per cent creeping acquisition by the promoter does not provide a level playing field against corporate raiders and financial institutions (FIs) should not disrupt existing managements," said Ficci president GP Goenka.

Under the takeover code, corporate raiders can pick up 15 per cent of the paid up equity over a 12-month period without triggering off the takeover code.

According to reports, Arun Bajoria has acquired 14 per cent shares in Bombay Dyeing from the market. He has reportedly control over 2 per cent more through friends and relatives.

Ficci maintains that a culture of hostile takeovers should not be encouraged in India, simply for the fact that promoters, who are long-term investors need to be encouraged in order to increase investment and hasten growth.

Meanwhile, Confederation of Indian Industry (CII), in a press release, pointed out that there was a need to review the provisions of Sebi's takeover code and strengthen the regulations, specially in the case of creeping acquisitions.

According to CII president Arun Bharat Ram, in today's fast changing corporate world, without affecting the competitive structure of the capital market and industry, there is a need to give the regulator (Sebi) more teeth and strengthen the regulations to make these more pro-active rather than reactive.

Also, the Associated Chambers of Commerce and Industry (Assocham) has asked for a review of the existing takeover code and advised the financial institutions to support existing `good management' and not to fund `hostile takeovers'.

Assocham president Shekhar Bajaj said it was easier for an outsider to mount an offensive than an insider to defend his own turf.

"Today, a raider can keep acquiring shares up to 15 per cent of a company equity without having to make an open offer, whereas a promoter can raise his holding in his own company by only 5 per cent every year through the creeping acquisition route, this is unfair," Mr Bajaj said.

Assocham has emphasised the need to have a mechanism under the Depositories Act where preventive steps could be taken to refuse the transfer of shares.

The transfer of securities in the demat regime is automatic and the Depositories Act supersedes the provision of the Companies Act which allow the interest of the shareholders at large.