sebi:MO/52/11/2006/CFD

SEBI · SEBI · 2005-12-01 · Dr. T.C. Nair, Whole Time Member

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Facts / Headnote

Acquirer held to have violated Regulation 10 read with Regulation 14(4); directed to make public announcement to shareholders of Dunlop India Ltd and Falcon Tyres Ltd within 45 days with offer price plus 10% p.a. interest

Provisions invoked

Regulations

Parties

Holding

Wealth Sea Pte. Ltd., by acquiring entire share capital of DRW holding 74.50% of DIL and 68.98% of FTL, indirectly acquired shares/control triggering Regulations 10 and 12; exempted under proviso to Regulation 12 by special resolutions but violated Regulation 10 read with Regulation 14(4) for failure to make public announcement. The acquirer was directed to make public announcement within 45 days at price based on higher of 28.11.2005 or three months from consummation, with 10% p.a. interest from 02.06.06 till payment.

Full text

Appearances: For noticee : Shri Shyam Mehta Shri Harminder Chawla For SEBI : Shri S V Muralidhar Rao, GM Shri Praveen Trivedi, DLA Shri Amit Tandon, AGM Ms Sakkeena.P.V, LO 1.0 Facts of the case 1.1 Securities and Exchange Board of India (hereinafter referred to as SEBI) noticed a news article in Business Line dated December 01, 2005 to the effect that one Ruia Group has acquired the shares of Falcon Tyres Limited and Dunlop India Limited (hereinafter referred to as FTL and DIL respectively/target companies) and has also agreed to acquire the control over FTL and DIL. SEBI also received certain investor complaints regarding the said acquisition. 1.2 In order to collect the details of the said acquisition to clarify the extent of compliance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as Takeover Regulations), SEBI issued a letter dated December 21, 2005 to Ruia group. Vide the aforesaid letter, the Ruia Group was inter alia advised to furnish the following details regarding the said acquisition:

3. Number of shares of FTL and DIL which were acquired/agreed to be acquired by Ruia Group. 4. Price at which the shares are acquired/agreed to be acquired.

that the Resolution regarding change of management was approved by the shareholders in the Extra Ordinary General Meetings of both DIL and FTL. 1.5 On perusal of the information received from Wealth Sea, it was found that Wealth Sea had triggered Regulation 10 and 12 of the Takeover Regulations. It was also found that the acquirer had not made any public offer to the shareholders of the target companies as required under Regulation 10 of the Takeover Regulations. It was however noted that Wealth Sea can be exempted from the compliance of Regulation 12 as it had passed a special resolution in EGMs of DIL and FTL (target companies) in terms of the proviso to Regulation 12. 2.0 Show Cause Notice, Reply and Personal Hearing 2.1 Accordingly, SEBI issued a detailed Show Cause Notice dated April 13, 2006 to the acquirer inviting its attention to the relevant provisions of the SEBI Act and the relevant Takeover Regulations. Vide the aforesaid show cause notice it was alleged that on a cumulative analysis of the whole set of transactions, it is clear that the acquirer had indirectly acquired the shares /voting rights of DIL and FTL. It was further alleged that as no public announcement was made as mandated by the Takeover Regulations, the acquirer has violated the provisions of Regulation 10 read with Regulation 14 (4) of the Takeover Regulations and therefore it was advised to show cause as to why appropriate actions under SEBI Act and relevant Regulations should not be taken against

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Source: SecMarx — sebi:MO/52/11/2006/CFD. 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.