sebi:WTM/KMA/CFD/06/10/2008
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Facts / Headnote
Show cause notice dated July 20, 2007 disposed of without directing public offer; adjudication proceedings directed to be initiated against acquirers for prima facie violation of Regulation 11(1) in respect of acquisition of 15,00,000 equity shares of Suraj Products Limited on January 8, 2002
Provisions invoked
- s. 19
- s. 11B
- s. 81
- s. 173(2)
Regulations
- Reg. 44
- Reg. 11
- Reg. 3
- Reg. 10
- Reg. 14
- Reg. 11(1)
- Reg. 3(1)
- Reg. 3(1)(c)
Parties
- Mr. Y.K. Dalmia
- Mrs. Gayatri Dalmia
- Mr. Ghanshyam Dalmia
- Mr. K.P. Dalmia
- Mrs. Kumudini Dalmia
- Miss Nandita Dalmia
- Miss Nivedita Dalmia
- Mr. R.K. Dalmia
- Mrs. Sunita Dalmia
- M/s. Narbada Innovative Products Pvt. Ltd.
Holding
The acquirers' preferential acquisition of 15,00,000 equity shares on January 8, 2002 increasing holding from 34.34% to 51.03% was not exempt under Regulation 3(1)(c) and prima facie violated Regulation 11(1) for failure to make a public announcement. The Tribunal declined to direct a public offer but directed initiation of adjudication proceedings for the prima facie violation.
Full text
Page 2 of 15 (promoter of the target company) and persons acting in concert with him, namely Mrs. Gayatri Dalmia, Mr. Ghanshyam Dalmia, Mr. K.P. Dalmia, Mrs. Kumudini Dalmia, Miss Nandita Dalmia, Miss Nivedita Dalmia, Mr. R.K. Dalmia, Mrs. Sunita Dalmia and M/s. Narbada Innovative Products Pvt. Ltd., on preferential basis. Mr. Y.K. Dalmia and the aforesaid persons acting in concert with him are hereinafter collectively referred to as the acquirers. The shares of the target company are listed on Bombay Stock Exchange Ltd. (BSE), Calcutta Stock Exchange Association Ltd. (CSE) and Bhubaneshwar Stock Exchange Ltd. (BhSE). As per the said report, the shareholding of the acquirers had increased from 34.34% to 51.03% of the enhanced voting capital of the target company, pursuant to the said acquisition. Subsequent to the receipt of the aforesaid report, SEBI sought further information/documents from the acquirers in respect of their above mentioned acquisition.
Page 3 of 15 obtained the necessary exemption from the applicability of the said provisions, in terms of Regulation 3(1) (c) (as it stood prior to September 09, 2002) of the Takeover Regulations, in respect of their acquisition.
Page 4 of 15 raising Rs.150 lakhs by way of fresh share capital and Rs.50 lakhs by utilizing internal resources of the target company. According to the acquirers, the aforesaid preferential allotment was made in the above background, for reviving the target company and protecting the interest of the stakeholders. The acquirers claimed that the promoters’ equity was raised to meet the conditions of 51% (by promoters) in the target company, as stipulated by SIDBI. According to the acquirers, there was no change in management, pursuant to the aforesaid acquisition. With respect to the non compliance of full disclosures, as required under regulation 3(1) (c) of the Takeover Regulations, the acquirers contended that the same was complied with by the target company by a resolution passed at its Extra ordinary General Meeting held on August 22,
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Source: SecMarx — sebi:WTM/KMA/CFD/06/10/2008. 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.