sebi:Order/PB/AU/2021-22/11988

SEBI · SEBI · 2008-08-19 · Parag Basu, Chief General Manager & Adjudicating Officer

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

Facts / Headnote

Adjudication proceedings disposed of without imposition of any monetary penalty

Provisions invoked

• s. 15
• s. 15H
• s. 15J

Regulations

• Reg. 13
• Reg. 10
• Reg. 14(1)
• Reg. 45
• Reg. 12
• Reg. 45(5)

Parties

• M/s Enam Securities Limited (now known as M/s Axis Capital Limited)

Holding

The Adjudicating Officer disposed of the adjudication proceedings against the Noticee (Enam Securities/Axis Capital) without imposing any monetary penalty, finding that the allegations of violating regulation 45(5) of SAST Regulations and Clause 4 and 20 of the Code of Conduct for Merchant Bankers were not made out.

Full text

Adjudication order in the matter of Spicejet India Limited Page 2 of 37 2. Pursuant to a Securities Sale and Purchase Agreement dated August 19, 2008, M/s WLR Recovery III Ltd. (hereinafter referred to as "WLR 1"), WLR Recovery IV/ ESC Ltd. (hereinafter referred to as "WLR 2"), India Asset Recovery Fund Ltd. (hereinafter referred to as "WLR 3") and WLR/GS India Ltd. (hereinafter referred to as "WLR 4") (collectively referred to as "WLR entities") acquired 680 FCCBs from GS and Istithmar. On August 29, 2008, WLR 3 converted 2 FCCBs and was allotted 368,960 equity shares in the Target Company. Further, on June 10, 2010, the WLR entities converted 227 FCCBs and were allotted 41,876,900 equity shares of the Target Company.

Adjudication order in the matter of Spicejet India Limited Page 3 of 37 (Now known as M/s Axis Capital Limited) (hereinafter referred to as “Noticee”) filed the draft letter of offer with Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) vide letter dated June 24, 2010.

Adjudication order in the matter of Spicejet India Limited Page 4 of 37 i. As per the original SPA, the Existing Shares Escrow Account was meant to hold only existing sale shares. In the amended SPA, the Shares Escrow Account was redefined and was also used to hold converted sale shares (which the sellers, i.e. the WLR entities were supposed to hold, as per the original SPA). ii. As per original SPA, the transfer of shares from the Existing Shares Escrow account (which indicated the shareholding of WLR entities) to the Balance Shares Escrow Account (which indicated shares held by Escrow agent for the benefit of the Acquirers) was slated to be done only on the date of the release notice. The so called ‘sale’ to the Acquirers which involved transfer of shares from the Balance Shares Escrow Account to the Existing Shares Escrow Account in tranches, even before release notice, was provided for vide amendment executed on October 05, 2010. The clause that the Appellants shall have no rights over the shares held in the Existing Shares escrow account was absent in original SPA and was introduced in the amended SPA. iii. The clause that WLR entities shall have no rights over the shares held in the Existing Account was added in the amended SPA. No such provision was present in the original SPA.

Source: SecMarx — sebi:Order/PB/AU/2021-22/11988. 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.