Sebi issues alerts on open offers by companies to protect investor’s rights

To educate the investor about their rights, markets regulator Sebi asked investors to be 'alert' about public announcements of share purchase plans of the companies where they have invested.

A company needs to issue a 'public announcement' in newspapers and through stock exchanges for the benefit of investors whenever they need to acquire shares from the minority shareholders including in cases of delisting and takeovers.

The delisting and open offer decisions can impact the interest of shareholders in a big way. Therefore, the investors need to be aware about such announcements made by the companies, in which they have invested.

An open offer is triggered when an acquirer purchases 25 per cent stake in a listed company. In that case, the buyer has to pick up an additional 26 per cent holding in the target firm.

In the delisting process, promoters need to ensure that at least 25 per cent of minority shareholders participate in such a process, or else they need to demonstrate that the entire 100 per cent investors have been approached.

In a separate tweet, Sebi also warned investors against schemes which promise very high returns in a short duration, including those claiming to create millionaires overnight.

The warning to investors comes as certain entities were running ponzi schemes in the country which siphoned of thousands of crore of rupees from unsuspected investors through such fraud schemes.

The regulator asked investors not to fall for schemes that assures unbelievably high returns in a very short time.

Sebi has begun exploring Twitter to spread investor awareness. In another recent tweet, the regulator asked the investors not to invest in stock market with borrowed funds.


(Image credits: Indiatimes)