Decks have been cleared for the government-appointed board of directors of fraud-hit Satyam Computer Services Ltd to take steps to sell a controlling stake in the company through a competitive bidding process, with a key regulatory hurdle on the pricing of a mandatory open-offer by the acquirer being removed.
The Securities and Exchange Board of India (SEBI) on Friday notified changes in regulations that deal with acquisition of companies, empowering the SEBI board to relax any or more of the provisions of the takeover regulations under specific conditions.
The SEBI board had last week decided to amend the takeover regulations, after considering a request from Satyam for relaxation in the norm that requires the acquirer to make an open offer to the shareholders of a target company at a price not less than the six-month average price of the company’s shares. Since the prices were high and not justified in view of the fraud and allegations of price-rigging, this becomes a special case.
The amended regulations provide for relaxation of any of the provisions only in the case of a company where the central government, the state government or any other regulatory authority has removed the board of directors and appointed independent persons as directors.
Under the amended rules, the SEBI board would relax rules if the government-appointed board of directors devise a plan providing for fair, transparent, open and competitive process for continued operation of the target company in the interests of all stakeholders of the target company.
The plan should not further the interests of any particular acquirer, the notification said.