Sources indicate the finance ministry will hold consultations with the ministry of corporate affairs to discuss India Inc's reservations on the proposed changes in the takeover code. CNBC-TV18's Aakansha Sethi learns from sources in the government that the finance ministry is not in favour of the proposed 100% open offer. The 100% open offer was proposed by the C Achuthan panel. Finance Ministry believes the change in open offer size is not healthy for Indian companies.
The Achuthan panel set up by the Securities and Exchange Board of India (SEBI) had proposed a hiking of that trigger for the open offer from 15% to 25% and had said that the open offer should be made for 100% of the equity.
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The finance ministry is not in favour of this proposal since the ministry feels that Indian companies will be put at a disadvantage as they do not have enough financing options and may not be able to raise resources for a 100% buyout as compared to foreign companies, which in comparison have several options. Banks in India do not, for instance, fund capital transactions.
It remains to be seen what view the market regulator, SEBI, takes finally on this.
Source: Money Control