sebi:IGPL/AO/DRK-BM/EAD-3/363/29-13

SEBI · SEBI · 2013-02-12 · D. Ravi Kumar, Chief General Manager & Adjudicating Officer

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Facts / Headnote

Proceeding disposed of; no penalty imposed, non-compliance not established

Provisions invoked

• s. 15A
• s. 15

Regulations

• Reg. 7
• Reg. 7(1)
• Reg. 11
• Reg. 7(3)

Parties

• Indo Green Projects Limited (presently known as IITL Projects Limited)

Holding

Non-compliance of Regulation 7(3) of the Takeover Regulations is not established against Indo Green Projects Limited (presently known as IITL Projects Limited), and no penalty is warranted.

Full text

Page 2 of 7 Show Cause Notice, Reply and Hearing 3. A Show Cause Notice bearing number A&E/DRK/BM/3768/2013 dated February 12, 2013 (hereinafter referred to as SCN) was served on the noticee under Rule 4 (1) of the Adjudication Rules, advising the noticee to show cause as to why an inquiry should not be held against it and penalty should not be imposed under Section 15A (b) of the SEBI Act for the alleged failure of the noticee to make disclosure under Regulation 7 (3) of the Takeover Regulations. The SCN alleged that IITL had acquired 50.17% of the share capital of IGPL from its former promoters, namely Shri Kamal Singhania and Ms. Usha Singhania (hereinafter referred to as Singhanias) in the year 2008. Pursuant to the said acquisition, IITL filed a draft Letter of Offer (LoO) dated June 25, 2008 with SEBI for acquiring additional 20% of shares of IGPL through open offer. While examining the LoO, SEBI observed that Singhanias had together acquired 4,00,000 shares of IGPL constituting 7.92% of the share capital on March 31, 2002 as persons acting in concert. The said acquisition increased their joint shareholding in IGPL from 21,28,900 shares constituting 42.15% to 25,28,900 shares constituting 50.07%. However, no disclosure was made by the noticee to the stock exchanges in respect of the aggregate shareholding of Singhanias as required under Regulation 7 (3) of the Takeover Regulations.

Page 3 of 7 capital of IGPL. The disclosure about such non compliance was made in the LoO issued by IITL while making the open offer. c) Singhanias were required to disclose the above referred acquisition to the target company within two days of acquisition under Regulation 7(1) of the Takeover Regulations. This disclosure is a pre-requisite for the disclosure to be made by the target company under Regulation 7(3) of the Takeover Regulations as the said provision clearly stipulates that target company shall make a disclosure within seven days of receipt of disclosure from the acquirer. d) Since no disclosure was made by Singhanias, the target company was not in a position to file the disclosure under Regulation 7(3) of the Takeover Regulations to the concerned stock exchange. e) The Whole Time Member of SEBI in SEBI vs Dagger Forst Tools Limited (order dated November 24, 2006) and the Adjudicating Officer in the matter of MTZ Polyfilms Limited (order dated September 9, 2011) has observed that the obligation on the target company to make disclosure under Regulation 7(3) of the Takeover Regulations arises only on receipt of the disclosure from the acquirer.

Page 4 of 7 Regulations requires details of acquisition of shares by the acquirer to be incorporated therein, suggesting that the obligation on the target company under Regulation 7 (3) of the Takeover Regulations arises only on receipt of information from the acquirer.

Source: SecMarx — sebi:IGPL/AO/DRK-BM/EAD-3/363/29-13. 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.