Securities and Exchange Board of India, on Monday, allowed promoters to increase their holding in the companies through creeping acquisition route even beyond 55 per cent but up to 75 per cent through open market purchases.
The measure is expected to boost the market sentiment, as promoters will be tempted to resort to creeping acquisition given the current depressed prices of their shares.
Hiterto, creeping acquisition, the process through which promoters can increase their stake in the company by buying up to five per cent of the company's equity in a year, was allowed only till the promoters holding reached 55 per cent of the equity of the company.
SEBI on Monday said as part of consolidation of holdings under Takeover Regulations, it would allow creeping acquisition beyond 55 per cent but upto 75 per cent via open market purchases in the normal segment.
However, consolidation via bulk, block or negotiated deals or through preferential allotment would not be permitted.
Besides, the market regulator has also said that henceforth promoters would not require permission if their holding in the company were to increase by five per cent in the event of a buyback of shares.
"It has now been decided to automatically exempt increase/ consolidation up to 5 per cent per annum as a result of buy back by a company," a press note by SEBI said.