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‘PSB recap: open offer not needed’
Context
Markets regulator SEBI exempted the central government from making an open offer for the shareholders of Punjab National Bank, Canara Bank and four other state-owned lenders following capital infusion
Under SEBI norms, an entity whose shareholding in a listed company goes beyond a particular threshold would have to make an open offer
What is an open offer?
It is a part of the takeover code as defined by the Securities and Exchange Board of India (SEBI). When a company acquires up to 15 per cent stake in another listed entity, an open offer gets triggered
- This means the acquiring company must make an offer to existing shareholders to buy an additional 20 per cent stake in the company. And, it is typically kept open for about a month, from the date of announcement. It is aimed at providing the shareholders an exit option, as there may be a management change post-acquisition and investors may perceive potential risks in the business
