The five decisions, taken by the takeover panel on Friday, focus on the way defense mechanism of buyback of shares can be used by managements in the case of a takeover bid. With the panel clearing the gray areas in the takeover-buyback regulations, companies can effectively use the buyback method to counter takeover.

The panel, which met under the chairmanship of former chief justice P N Bhagwati, has said that pursuant to buyback, if a shareholder were to involuntary cross the threshold limits specified under the takeover regulations, the takeover code will not be triggered provided there has been no change in management.

Addressing an informal press meeting here today, Bhagwati said: "Thus, post-buyback even if the threshold limit under the takeover code is breached, if there is no change inmanagement control the takeover code will not be triggered".

He said that when a buyback is open, takeover offer can be made. However, the buyback offer cannot be withdrawn. It can, however, be modified subject to the company obtaining fresh special resolution from its shareholders.

The panel was of the view that buyback offer and takeover offer are mutually exclusive and independent of each other and would be governed by the respective guidelines. Accordingly, any buyback offer made when a takeover is in process the same will not be considered as a competitive bid, he said.

The five decisions focus on the way defense mechanism of buy-back of shares can be used by managements in case of a takeover bid, he said. All the recommendations made by the Bhagwati panel would be incorporated in the buyback regulations which would be notified by early next week.

The committee was also called upon to give its recommendations on implications for the takeover code arising from buy back. The committee hasalready finalised its decisions with respect to amendments to the code, Bhagwati said adding that the final draft would take another month.