In this paper an attempt has been made to comment on the contents of the Draft Regulation for ‘Substantial Acquisition of Shares in Listed Companies’ of SEBI (Consultative Paper 1). The authors broadly concur with the guiding principles, thrust and coverage of the proposed regulation. They wonder whether the open market purchase as outlined in the proposal will fully protect the interests of the small shareholders. Accordingly, the paper argues as to why open market purchases should not be allowed and why all acquirers wishing to exceed the permissible holding must follow the procedure of open tender offers. Further, the paper brings out the need for a specific regulation governing the possibilities of partial and two-step takeovers. Reference is also made to relevant provisions of the UK and US codes in this regard. And finally, it is argued that with respect to takeover defences, the duties of an acquire need to be spelt out explicitly, especially in certain specific areas.
