SEBI's role in Takeover Price

In Letters to the Editor, ET,Page 14 THURSDAY, MAY 24, 2007

A clarification

[ THURSDAY, MAY 24, 2007 02:31:00 AM]

Apropos of the news item captioned “Sebi cannot decide takeover price” (ET, May 18), it needs to be pointed out that the heading of the news item is grossly misleading and wrong.
The caption apparently suggests that Sebi cannot decide takeover price and that the regulator has no role to play in the valuation of shares under takeover scheme.

However, the Supreme court of May 16, 2007 in the matter of H L Somany and others v/s. Sebi makes no such mention.

On the contrary, as has been rightly mentioned in the text of the news item, the Court has observed that Sebi has to be satisfied that the offer made is reasonable and fair, and in the interest of the shareholders and that as the regulator Sebi is not bound to accept the offer price which is required to be incorporated in the public offer, if it suspects the offer price does not represent the fair value of the shares determined in accordance with Regulation 20 (5).

Amrita Shukla
Manager (Communications), SEBI