Takeovers must take care of minority shareholders

Aug 13 2013, 05:24 IST
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SummaryThe chairman of the Securities and Exchange Board of India (Sebi), UK Sinha, is confident that all the companies will finally comply with the minimum public shareholding norms

The chairman of the Securities and Exchange Board of India (Sebi), UK Sinha, is confident that all the companies will finally comply with the minimum public shareholding norms. In an extensive interview with Santosh Tiwari and Ira Dugal, Sinha explains Sebi’s point of view on a number of important issues including the possibilities of National Spot Exchange Ltd (NSEL) problems spilling over to the stock market, Holcim-Ambuja and Jet-Etihad deals, and the impact of changes in the Sebi Act to empower the regulator for tackling schemes like Saradha.

What are the chances of spillover of NSEL developments to the securities market?

So far as securities markets and the involvement of our broker members are concerned, we have been reviewing regularly—payments and settlements are happening on time, the margins are nowhere under any stress level. So things are perfectly normal so far as this episode is concerned. We are keeping a very close watch on our system. It is possible that a broker member under the securities market might also be participating in the commodities spot market or in the commodities futures market, but there is a safeguard—they can’t do it under the same entity, they have to create a separate legal entity.

So, there is ring-fencing. It’s not that any problem that occurs in the commodities market gets transmitted here. Even if some of our brokers are there (commodities market), they are doing it through a separate entity.

The fear is that some of the brokers—if their money is stuck in the commodities market—will have to liquidate the money in the stock market to tackle with the problem there. Are you reviewing that also?

Yes. We are reviewing the situation regularly. We have reviewed the situation and margins are not anywhere near stress levels, they are completely within the normal range.

There are obviously inter-linkages between the two markets. Does it make sense that the two markets are not regulated by the same regulator?

I can participate in an academic decision on the issue but my reaction to it would only be that we are keeping a close watch on our systems and people who are in the market need not worry.

As the deadline for meeting public shareholding norms has ended now, are you satisfied with the outcome?

Nobody trusted that Sebi will be able to enforce it. I am very happy to share this with you that even the government companies have become fully compliant, including the

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