sebi:WTM/ASB/CFD/CFD-RAC-DCR-1/30516/2024-25

SEBI · SEBI · 2023-10-18 · Ashwani Bhatia, Whole Time Member

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Facts / Headnote

Interim directions issued requiring Noticees 1 to 7 to furnish undertaking to apply for statutory approvals on or before July 12, 2024, facilitate the open offer and constitute Committee of Independent Directors; order to be treated as show cause notice

Provisions invoked

Regulations

Parties

Holding

SEBI prima facie held the Target Company violated Regulation 26 of SAST Regulations, 2011 and Regulations 4(2)(a) and (d) of LODR Regulations, 2015 by refusing to seek statutory approvals, and directed Noticees 1 to 7 to undertake to apply to RBI, SEBI and IRDAI by July 12, 2024, facilitate the acquirers' open offer obligations and constitute the Committee of Independent Directors.

Full text

Interim Order in the matter of Religare Enterprises Ltd. Page 2 of 12 1 to 4 were together holding 21.54% shares of REL. On September 25, 2023, the Acquirers placed orders with the stock broker, JM Financial Services Limited, to purchase up to 1,73,15,874 Equity Shares (i.e. 5.27% of the equity share capital), at a price of not more than Rs.235.00 per equity share, on any recognized stock exchange in India in tranches/ lots, subject to receipt of the relevant approvals from various regulatory authorities. The said proposed market purchase order would have increased the shareholding of the Acquirer beyond 25%, as a result of which the acquirers were obligated to make an open offer to the shareholders of the Target Company, in terms of Regulations 3(1) and 4 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations, 2011”).

Interim Order in the matter of Religare Enterprises Ltd. Page 3 of 12 Acquirers to furnish necessary information for obtaining regulatory approval and complete the open offer process.

Interim Order in the matter of Religare Enterprises Ltd. Page 4 of 12 proper to acquire control of REL, and their representations in this respect were currently pending before the relevant regulators. As a result, SEBI was left with no jurisdiction to give advice in relation to a matter that was already pending before the regulatory authorities. (d) SEBI had misconstrued RBI’s e-mail dated February 5, 2024 sent to the Acquirers, which effectively conveyed that application for prior approval of change in management control could be made only by the Target Company. The said email was not addressed to REL or SEBI and SEBI should not allow itself to be drawn into this matter between RBI and the Acquirers. RBI’s e-mail only reiterated the statutory position that the Acquirers were not entitled, in law, to submit any application to the RBI. The said email did not put an obligation on the Target Company to mandatorily file any application for approval. SEBI had no jurisdiction to take any action based on RBI’s enforcement of its own regulations. (e) The detailed representations to the RBI that the Acquirers were not “fit and proper” to take over or exercise control over REL was currently pending before the RBI. (f) The reference in SEBI’s Letter 2 that Regulation 18(11) and Regulation 26 of SAST Regulations, 2011 have a reciprocal influence on each other was improper and unwarranted as these regulations cannot be given a conjoint reading. The Target Company was not obligated to act

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Source: SecMarx — sebi:WTM/ASB/CFD/CFD-RAC-DCR-1/30516/2024-25. 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.