Creeping capitulation - takeover regulation amendments
Sandeep Parekh -
Tuesday, November 04, 2008 11:08 PM
If you had any doubts about my views of the perversity of the SEBI action on relaxing the creeping acquisition limits (blogged yesterday, linked here), take a look at what the Hong Kong regulator has said about similar lobbying efforts by promoters, it is probably more hard hitting than what I said yesterday:
"The Takeovers Panel by a substantial majority was opposed to any relaxation of the
provisions of the relevant rules for the following reasons:
1. the proposals ran counter to General Principle 1 of the Takeovers Code which requires
equality of treatment for all shareholders; this is an absolutely fundamental principle
underpinning the regulation of takeovers and mergers in Hong Kong;
2. no jurisdiction that had a similar regulatory framework as Hong Kong had proposed
temporary waivers of important provisions of their takeovers regulations in response to
recent market conditions;
3. the proposals, were they to be implemented, would likely reflect poorly on Hong Kong
as an international financial centre. In this regard, it is noted that the temporary waiver
of the 35% trigger and 5% creeper in 1987 was subject to criticism;
4. while the stock market had experienced substantial declines in prices, there was no
suggestion that it was not functioning properly;
5. the proposals were opportunistic in that they appeared to be motivated more by the
interests of major or controlling shareholders than the market as a whole;
6. they would be seen as favouring big business interests at the expense of other stock
market participants and, in fact, may work against their interests; and
7. there was no evidence to indicate that support for the proposals was widespread or
that the proposals would boost confidence in the market for the shares of particular
companies or the market as a whole.
Here is the link to the two page rejection of the request by such lobbies. Point 2 is obviously inaccurate as the Indian regulator had not only capitulated temporarily, but permanently to the special requests just two days before. Many thanks to a reader for bringing it to my attention. I guess fair minds think alike.