Promoters have received a Diwali bonanza with the Securities and Exchange Board of India (SEBI) attempting to find the means to provide support to the falling stock market. Promoters would now be able to raise their holdings beyond 55 per cent through creeping acquisition at the current cheap valuations.
The market regulator on Monday raised the limit for creeping acquisition to 75 per cent from the current 55 per cent. The acquisition of up to 5 per cent of shares in a company every year by promoters holding 55 per cent and above can, however, can be done only via open market purchases in the normal segment. Such promoters would not be allowed consolidation via bulk, block or negotiated deal or through preferential allotment.
Furthermore, hitherto, for any increase in the holding of promoters pursuant to buy back, exemption under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations was required to be sought. SEBI has now decided to automatically exempt increase/consolidation up to 5 per cent per annum as a result of buy back by a company.