sebi:CO/123/ISD/01/2005
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Facts / Headnote
Directed Classic Credit Ltd. and Panther Fincap & Management Services Ltd. to make public announcement under Chapter III in terms of Regulations 10 & 11 to acquire 20% of capital of DSQ Industries (now Jardine Overseas Ltd.) taking 01.03.2001 as reference date within 45 days, with payment within 30 days of closure and interest @15% p.a. from 28.06.2001 till actual payment.
Provisions invoked
- s. 4(3)
- s. 11
- s. 41
Regulations
- Reg. 44
- Reg. 11
- Reg. 2(1)(c)
- Reg. 2(1)
- Reg. 10
- Reg. 12
- Reg. 14(1)
- Reg. 2
- Reg. 22
- Reg. 11(1)
- Reg. 199
- Reg. 58
- Reg. 197
Parties
- M/s Classic Credit Ltd.
- M/s Panther Fincap & Management Services Ltd.
Holding
Classic Credit Ltd. and Panther Fincap & Management Services Ltd. acted in concert and acquired shares/voting rights in DSQ Industries in violation of Regulations 10 and 11(1) of the Takeover Regulations. They were directed to make a 20% open offer taking 01.03.2001 as reference date with 15% p.a. interest from 28.06.2001 till actual payment.
Full text
Page 2 of 19 (a) Classic Credit Limited Date Received from No. of shares 15/02/01 Arun Polymers 1000000 15/02/01 Aspolight Barter 800000 01/03/01 Greenfield Investments 2500000 07/03/01 DSQ Holdings 2000000 08/03/01 GTB Pledge Closure 850000 21/03/01 Indsec Securities 500000 31/03/01 Triumph Int. Fin. 250000 T O T A L 7900000 (b) Panther Finacap and Management Services Limited 1.4 It was also observed that Classic Credit and Panther Fincap were both owned and controlled by Shri Ketan Parekh. It was alleged that the said two entities had acted in concert and that they had through the said transactions acquired shareholding in DSQ Industries. The collective shareholding acquired by the said two entities (hereinafter referred to as “the acquirers”) on various dates was as under: Date Received from No. of shares 15/02/01 Cooltex Commodities 900000 01/03/01 Greenfield Investments 2500000 16/03/01 Indsec Securities 300000 21/03/01 Indsec Securities 590000 T O T A L 4290000
Page 3 of 19 Date No. of shares % of shares acquired Cumulative shareholding as % 15.2.2001 27,00,000 13.47 13.47 01.3.2001 50,00,000 24.95 38.42 7.3.2001 20,00,000 9.98 48.60 8.3.2001 8,50,000 4.24 52.64 16.3.2001 3,00,000 1.50 24.13 21.3.2001 10,90,000 5.44 59.57 31.3.2001 2,.50,000 1.25 60.82 It was further observed that despite having made the said acquisitions, classic credit and panther fincap failed to make a public announcement as required under Regulations 10, 11 12 and 14 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as “takeover regulations”) nor did they seek exemption from making the said public announcement. 2.0 Show cause notice 2.1 In the light of the findings of investigation, Show cause notice was issued to the classic credit and panther fincap on 19.2.2004 advising them to show cause why action including directions under Regulations 44 and 45 of the Takeover regulations should not be issued against them. The said entities submitted their replies as under: Classic Credit submitted their reply vide letter dated 09.03.2004 to the said show cause notice as below: (i) Classic Credit submitted that they are a separate legal entity having their own identity. (ii) They submitted that the statement that “The acquirers are Ketan Parekh entities” is erroneous, contrary to law and has been made without application of mind. They pointed out that they are a
Page 4 of 19 separate legal entity and that they have in no manner acted in concert with the other party to whom the show cause notice is addressed. (iii) They submitted that the all the statements in the said show cause notice alleging acquisition of shares / voting rights / control of DSQ Industries Ltd. are denied and refuted by them as being incorrect and unsubstantiated. (iv) As regards the transaction details of DSQ Industries Ltd., they submit as under: a) On 15.02.02, the shares received from Arun Polymers and Aspolight Barter were not purchased by them but were in fact loaned to them. A major quantity was further immediately pledged on the same day or the next day to Bank of Punjab and Global Trust Bank. Thus there was no ownership of shares of DSQ Industries Ltd. by them and thus these shares cannot be said to have been owned by them at any point of time. b) As for the shares which were pledged with Madhavpura Bank on 21.02.01 and which share were reflected in their account from 15.02.01 to 20.02.01, they submitted that it was a small quantity of 2,50,000 shares and not exceeding the acquisition limit of 5% as per SEBI Regulation 11(1). c) Further as regards share received from Greenfield Investment on 01.03.01, they submit that the same were also in fact a loan provided to them. The same was further pledged with Madhavpura Bank on the same day itself. It is pertinent to note that an order dated 31.10.2002 of Adjudicating Officer referring to the shares received as
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Source: SecMarx — sebi:CO/123/ISD/01/2005. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.