Indian financial market regulator -the Security and Exchange Board of India (SEBI) has introduced new norms governing acquisitions and takeovers under the title 'The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011'. The new norms would be effective from this month itself.

The newly notified norms want an entity buying 25 per cent stake in a listed firm besides mandatorily making an open offer to buy an additional 26 per cent shares from public. The new rules also offer stakeholders exit option at the same price.

The body said, "No acquirer shall acquire shares in a target company which taken together with shares or voting rights held by him... entitle them to exercise 25 per cent or more of the voting rights..., unless the acquirer makes a public announcement of an open offer."

SEBI also did away with the non-compete fees that acquirers generally pay to the sellers in merger and acquisition deals as per the recommendations of SEBI's board meeting held in July. The body did not altered definition of control while the minimum offer size shall be increased to 26 per cent of the target company.