The Securities and Exchange Board of India (SEBI) has changed the takeover regulations to reduce the cost of mergers and acquisitions (M&A) for Indian companies.

Under the new rules, disruptions in stock prices due to news reports or leaks of sensitive information will not be considered when determining the open offer price.

This change is part of SEBI’s new rumour verification framework, will be effective on June 1.

The framework requires the top 100 listed companies to confirm, deny, or clarify any media-reported information leading to significant share price movements within 24 hours.

This requirement will be expanded to the top 250 listed firms from December 1, 2024. The amendments aim to prevent premature leaks from affecting stock prices and jeopardising deals.

They also encourage listed companies to address market rumours confidently, knowing that resulting stock price volatility will not deter potential bidders.

These changes aim to reduce misinformation-based trading and promote a more stable and trustworthy market environment.