Draft Takeover Code 2010 may not be implementable in its present form. There are several stakeholders which need to be aligned in order to make such large scale changes to the takeover code implementable.

On September 4, 2009, the Securities Exchange Board of India constituted a Takeover Regulations Advisory Committee under the Chairmanship of C Achuthan, with a mandate to examine and review the existing Sebi (Substantial Acquisition of Shares and Takeover) Regulations 1997 (1997 Sebi Takeover Code), and to suggest suitable amendments, as it deems fit.

However, there is a saying—"If it ain't broke, don't fix it". Sweeping change to any market regulations, which have worked for 13 years, without creating serious market disruption requires a major debate. Any regulator taking the plunge has to be conscious that the proposed change must be implementable, not disruptive, and all consequential law, impacting and surrounding the intended change are also correspondingly in place. I suspect that the draft Takeover Code 2010 will not be implementable in its present form, as several alignments of policy and law are not in place.

There are several stakeholders which need to be aligned in order to make such large scale changes to the takeover code implementable. The Reserve Bank of India for one would be concerned about acquisition financing by banks which it regulates. The Ministry of Corporate Affairs and the Companies Act 1956 would be concerned with respect to compulsory squeeze out. The Ministry of Finance and Sebi would be concerned for the Securities Contract Regulation, 1956 and the Listing Agreement and the impact on Rule 19(2)(b) of the Securities Contracts (Regulations) Rules 1957 relating to minimum public float along with impact on Sebi Delisting Regulations and their synchronization with the draft Takeover Code 2010. Aside from these, international alignment with international instruments like Foreign Currency Convertible Bonds, American Depository Receipts or Global Depository Receipts and international law are also concerned with change of such magnitude. "All the ducks need to be in a row" for leading an effective change, and I do not see or visualize the draft Takeover Code 2010 as being aligned with national or commercial purpose, the need for simplicity or as a game changer.

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