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Sebi Allows Promoters To Hike Stake Through Preferential Allotment

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Sebi Allows Promoters To Hike Stake Through Preferential Allotment
PTI - 17 June 2020
New Delhi, June 17: Stock market regulator, Securities and Exchange Board of India (Sebi) has amended the takeover norms to allow promoters to increase their stake by up to 10 per cent through a preferential allotment.

The move will give a boost to promoters wanting to increase their stake and enhance investor confidence as the promoter buying more shares is a good signal to shareholders.

The amendment in the regulations allows a promoter owning 25 per cent or more voting rights in a company to increase shareholding by up to 10 per cent in a year versus the earlier limit of 5 per cent. This is valid only for the current financial year and is allowed for a preferential issue of equity shares.

"Sebi relaxation on the creeping acquisition is a double whammy for promoters. They will not only be able to increase their stake but this will also build investor confidence." said Rajesh Thakkar, Partner & Leader/ Transaction Tax, Tax & Regulatory Services, BDO India.

As per a notification, the amendments have been made to the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

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