| Competition watchdog may have its say on all M&As |
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New Delhi, 29 August The tussle between the Competition Commission of India (CCI) and sector regulators over jurisdiction on mergers and acquisitions may soon be settled. The Cabinet Committee on Economic Affairs (CCEA) is likely to consider the proposal of empowering the competition watchdog for this, while keeping provisions for consultations between the two. The proposed amendments in the Competition Act, 2002, are expected to be considered in a CCEA meeting in the coming week. The ministerial panel would evaluate recommendations of a group of ministers (GoM) headed by Finance Minister P Chidambaram, which suggested mergers and acquisitions, including those in the banking, telecom and pharmaceuticals sectors, be under CCI's purview. "We are expecting more powers for CCI, in line with the GoM's recommendations. It is eminently possible the Cabinet would take up the proposal at its next meeting," a senior official in the Ministry of Corporate Affairs told Business Standard . The GoM, set up for considering amendments in the Competition Act, has suggested more powers for CCI. According to a source, the GoM feels matters of competition must be scrutinised by CCI, which is empowered to check the abuse of dominance and unfair trade practices. Therefore, CCI must have a say in clearing mergers and acquisitions, even in sectors like banking and telecom. Earlier, various sectors had opposed CCI's scrutiny of mergers and acquisitions, saying specific regulators in various sectors were already looking into the issue and, therefore, overlapping of jurisdiction was possible if CCI took up the issue. Some sectors also doubted CCI's ability to monitor mergers and acquisitions. In the past, the lobby group in the pharmaceuticals sector has also argued CCI did not have the wherewithal to understand public interest in the pricing of drugs and, therefore, foreign investment in the sector should be cleared by the Foreign Investment Promotion Board. However, ruling out blanket exemptions to any sector from the purview of the Act, the GoM suggested there was no reason to keep CCI away. Instead, it maintained competition should be overseen by a specialised agency. It, however, suggested CCI and sector regulators must consult each other if their jurisdictions overlapped. "Section 21 and 21 (A) of the Act states the commission, as well as the sector regulator, may make reference to each other if need be. This will now be changed to "shall", making it mandatory for both to consult each other," the official said. However, to leave a provision for exemption, the GoM decided in case there was a need for exemption, the Ministry of Corporate Affairs, under whose ambit CCI functioned, would have the powers to decide. "Such a move by the GoM will reinforce the integrity of economic governance system in the country," said Pradeep Mehta, secretary general, CUTS International. He added, "Otherwise, such legislative ambiguities would have led to forum shopping and an uncertain legal environment, which would also affect the investment climate adversely." The GoM also recommended powers for search and seizure to CCI at the level of Director General of Investigations, the source said. The GoM had finalised its recommendations last week, the source added. CCI, sector regulators may consult each other if jurisdictions overlap Earlier, various sectors had opposed CCI's scrutinyof mergers and acquisitions, saying specific regulators were alreadylooking into the issues |
| Sebi favours shorterIPO bidding period |
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New Delhi, 29 August The Securities and Exchange and Board of India (Sebi) will soon ask companies seeking to raise funds through initial public offers (IPOs) to complete the bidding process within a maximum of five days and get listed in another five days. To shorten the entire IPO process, the regulator is also working on faster allotment of shares to investors and reduce the time gap between closure of issue and final listing from 12 days to five days, asenior official said. Currently, Sebi regulations require the bidding period to be completed in a minimum of three working days and a maximum of 10, including the extension given pursuant to a revision in the price band by the issuer. However, companies are not allowed to extend the bidding period in case there is no revision of a price band. Sebi is of the view that a faster and shorter IPO period would "induce greater process efficiencies and enhance the investor confidence in the issue," the official said. Consequently, Sebi is looking to shorten the bidding period in IPOs to two or three working days in normal cases. Besides, it would consider granting one extension of a maximum two working days, irrespective of whether there is a change in the price band. In case of an extension, all the investors would have the option to withdraw their earlier bids made until the revised issue closure date. The decisions are being taken by Sebi pursuant to the recommendations given by its Primary Market Advisory Committee (PMAC). The new guidelines would be soon put in place by Sebi. Some other steps identified by Sebi for the benefit of IPO investors include reduction of time taken after issue closure to the listing date from 12 days to five days in a phased manner. It would also look at rationalisation of disclosures in the offer documents filed by the companies. |
| SAT seeks final Sebi orders within 2 weeks in IPO cases |
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The Securities Appellate Tribunal today asked Securities and Exchange Board of India (Sebi) to pass final orders within two weeks in two difference cases of (initial public offer) IPO irregularities, as more than seven months have lapsed since interim penalties were imposed by the regulator in both the matters. While one case is related to investigations by the Sebi in the IPO of RDB Rasayans Limited, the other relates to alleged irregularities in the IPO and trading of the shares of PG Electroplast Limited. Sebis investigations into RDB Rasayans IPO is primarily focused on disclosures made in the offer documents, the bidding pattern, trading on first day of listing and utilisation of IPO proceeds. During its probe, Sebi prima facie found lack of due diligence on the part of RDB Rasayan IPOs merchant bankers, Chartered Capital and Investment Limited. Consequently, Sebi through its exparte ad-interim order dated December 28, 2011, restrained the merchant bankers from taking up any new assignment or involvement in any new public offer from the securities market till further orders. The merchant bankers later approached SAT, stating they have demonstrated that there was no merit in allegations against them and Sebis action of not passing a final order "calls for setting aside the impugned order". |
Company Secretary, Chennai
email csarengarajan@gmail.com
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