sebi:CO/474/TO/01/2003

SEBI · SEBI · 2002-09-14 · G.N. Bajpai, Chairman

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Rejected

Regulations

• Reg. 4
• Reg. 11
• Reg. 3
• Reg. 9
• Reg. 12
• Reg. 28
• Reg. 8
• Reg. 14
• Reg. 11(1)
• Reg. 20(5)

Holding

SEBI rejected the Acquirer's application for exemption from public announcement and Chapter III procedural requirements and directed that if it acquires 8,06,192 shares (7.3%) of Hindusthan National Glass & Industries Ltd. from the S.K. Somany Group under the MOU dated 07/10/02, it must comply with Regulation 11(1) along with Chapter III of the Regulations.

Full text

Company") from S K Somany Group @ Rs 40/- per share in terms of Memorandum of Understanding signed on 07.10.02. 1.2 The shares of the Target company are listed at the Mumbai Stock Exchange and the Calcutta Stock Exchange. In the Target Company, C K Somany Group holds 73.05% equity shares, S K Somany Group holds 7.75% equity shares (prior to the proposed acquisition), H L Somany Group holds 7.72 % equity shares, R K Somany Group holds 10.83 % equity shares and the balance 0.65% equity shares are held by public shareholders being 136 in number. 1.3 As a result of the proposed acquisition, the Acquirer would have to make an open offer to the public shareholders of the Target company in terms of sub regulation (1) of regulation 11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the Regulations"). 2.0 APPLICATION 2.1 The Acquirer made an application dated 14/09/02 under sub-regulation (2) of regulation 4 of the Regulations to the Securities and Exchange Board of India (hereinafter referred to as "SEBI") seeking exemption from compliance of the provisions of regulations 12,14, 15, 16, 18, 21, 22(3), 22(4), 22(5) and 22(8) for making public announcement under sub regulation (1) of regulation 11 of the Regulations. 3.0 SUBMISSIONS 3.1 In the aforesaid application, the Acquirer , inter-alia, submitted the following: 3.2 The Target company was promoted by the Somany family. The Somany family, comprising the groups of Mr. H.L.Soma

vide their letter dated 22nd August 2002 at a price to be mutually agreed upon and subject to the C.K.Somany group getting the said order dated 25th February 1997 vacated to the extent of 8,06,192 equity shares held by the S.K.Somany group. 3.6 The Calcutta High Court vide its order dated 13th September 2002 modified its earlier order dated 25th February 1997, thus permitting the C.K.Somany group 8,06,912 equity shares of the Target company held by the S.K.Somany group. 3.7 On receipt of the copy of the aforesaid order of the Calcutta High Court, the C.K. Somany group proposes to enter into a Memorandum of Understanding with the S.K.Somany group to purchase their shareholding of 8,06,912 equity shares in the Target company at a price to be mutually agreed upon between the parties. 3.8 Due to the operation of the order of the Hon’ble High Court restraining them from transferring or disposing their holding in the Target company, the groups of Mr. R.K.Somany and Mr. H.L.Somany [holding 10.83 % and 7.75% respectively in the Target company] will not be eligible to participate in the open offer. As such the mandated public offer can be made only to other public shareholders holding 0.65% of the share capital of the Target company. 3.9 The procedural requirements for making an open offer are quite elaborate and involve much effort, time and costs. In view of the small number of shareholders involved, complying with all the formalities involved in the open offer would impose unjustif

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Source: SecMarx — sebi:CO/474/TO/01/2003. 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.