The increase in the open offer size from 20% to 26% was mainly because of industry pressure which was against the 100% offer size recommended under the Achutan Committee set up by SEBI in 2010 to look into changes in the takeover rules, said Pavan Kumar Vijay, MD, Corporate Professionals ,a securities and corporate laws advisory firm. The move is good for domestic promoters and the industry as the cost concerns related to 100% stake buy under the earlier recommendations and funding of offers of such large sizes have been addressed to a large extent, said Vijay, a former president of ICSI.

Besides, the SEBI  board, which met here on Thursday, has also done away with the controversial non-compete fees that an acquirer has to pay to the promoters of the target company. In a number of recent takeovers, the acquirer had paid about 10-20 % more to the promoters of the target company in the name of non compete fee but had denied the same to the non-promoter shareholders. The change in rules will allow every shareholder the same price per share in all the acquisitions A non compete fee also ensures that the seller does not enter the sector in which it was working.

According to Abhishek Dalmia,who made some visible hostile takeover bids in the past, the change in takeover rules would give investors flexibility and leverage to invest more in a company. Though the new rules definitely provide for more M&A activity, it may not lead to any substantial increase in hostile takeovers because institutions are not dispassionate and are almost always pro-incumbent promoter, Dalmia told TOI.

SEBI also simplified the process of opening a demat account by making the forms simpler. Sinha said that once the new form is in place ,the number of signatures one needs to put in to open a trading account will drop from more than 50 to just about one or two .The Know Your Client (KYC) requirement ,a process that allows the market regulator to keep track of every investor in the market, will also be simplified .Currently, an investor has to complete separate KYC processes for investing in mutual funds and stock market although both are regulated by SEBI.TNN