SEBI’s New Price Protection Regime – Is Deal Making Really Safeguarded?
2024-05-24
Author: Shreyas Bhushan
What?
SEBI’s 2023 consultation paper re: market rumour verification offered 2 price protections for public M&A: (A) insulate deal making from post-verification price fluctuations for 60-180 days; and (B) price protection only for 1 day after rumour verification
SEBI has now adopted (B), but also allowed the same protection on a rolling basis for multiple rumour verifications
Bottom Line
Inadequate price protection for deal-making, esp. after forcing listed companies to verify rumours
Could significantly hurt retail and public shareholders, since well-cooked deals may fail due to premature rumour verification and attendant price spike/ fall
Only 24 hour time period to confirm market rumours – compliance officers, directors,promoters and KMP to gear up