A new promoter makes enormous effort in bringing an Initial Public Offer and inviting the public to subscribe to such offering. The investors rely on the credentials of the promoter and invest on his assurance to the Company’s growth. But what if the promoter exits unwarrantedly and a new person acquire the control of the Company. Not all investor may be willing to continue their investment, and may wish to exit. This is the broad logic behind Takeover Regulations worldwide.
In India, the Securities & Exchange Board of India (SEBI) encoded SEBI (Substantial Acquisition of Shares & Takeovers) Regulations in 1994 and later reframed them in 1997 to regulate such takeovers via transfer of shares & Acquisition of control. However, in the present era, restructuring of corporates is being envisaged by the mode of takeovers. Takeover is as effective means of restructuring and is a faster route for growth and expansion of business.