Kneejerk reactions by SEC
I refer to the regulations enforced by the SEC subsequent to the questionable NSB-TFC share transaction.
The SEC seems to have overstepped its authority by insisting that any share purchase in excess of Rs. 20 million by the NSB should be supported by a certified Board resolution.
It is for the Finance Ministry to issue such instructions and definitely not the SEC. If the SEC can issue such instructions then why not impose such conditions on investments made by the EPF, ETF, BOC etc as these investments also involve public funds. Or is the SEC waiting for a similar transaction like the NSB-TFC deal to take action?
The SEC also sets a cap of 20 % on crossings. If Company “A” wants to buy shares in Company “B’ at whatever premium it is not the duty of the SEC to control this. The buyer and the seller are only responsible to their shareholders. In the case of NSB it is the GOSL. If I am a high net worth individual and I want to buy shares at a 30% premium for control, what business is it of the SEC that I need their approval?
By the time approval is sought and approved the market would know of the deal and somebody might offer a higher premium and knock me out.
The above two steps are simply knee jerk reactions.
C. Ramachandra
