(
(a) whether the Government have received any representation regarding giving weightage to small investor in 20 per cent Open Offer Clause;
(b) if so, the details of the suggestion made in this regard;
(c) the Government`s response thereto; and
(d) the action taken thereon?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL)
(a) : Yes, Sir.
(b) It was suggested that small investors should be given priority,
that is, small investors upto Rs. 1 lakh or 1000 shares should be
given priority over big investors. Effectively, it should be
mandatory for the bidder/acquirer to purchase the full quantity of
shares offered by small investors in the open offer.
(c) & (d) The matter was referred to the Securities & Exchange Board
of India (SEBI). SEBI has intimated that on examination it was not
found feasible to accept the suggestion regarding reservation for a
class of shareholders in an open offer for the following reasons.
Under the Companies Act, small shareholders are not treated
differently from large shareholders. Such a measure may encourage
investors to transfer their shares to their relatives and friends
prior to an open offer and tender that many shares under different
names in order to get all their shares accepted. Further, SEBI has
to keep in view the interests of all shareholders.