sebi:WTM/KMA/CFD/212/01/2010
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Facts / Headnote
Show cause notice dated July 17, 2007 disposed of; acquirers held liable for contravening Regulation 11(1) of the Takeover Regulations; adjudication proceedings directed to be initiated; no direction to make a public offer to shareholders.
Provisions invoked
- s. 19
- s. 25
Regulations
- Reg. 44
- Reg. 11
- Reg. 3
- Reg. 11(1)
Holding
The acquirers' increase in voting rights from 62.56% to 75% consequent to the target company's buy-back triggered Regulation 11(1) of the Takeover Regulations, and their failure to make a public announcement was a contravention warranting initiation of adjudication proceedings. However, no direction was issued requiring the acquirers to make a public offer to shareholders.
Full text
Page 2 of 8 consider this petition and shall deal with it in accordance with law indicating the outcome to the proceedings undertaken by the SEBI to the petitioner. This is without prejudice to the rights and contentions to the parties.” The said writ petition was inter alia filed for a direction for quashing the decision of the target company to open the rights issue alleging that the same was done inter alia in violation of the Takeover Regulations. It was inter alia stated that the petitioner (Jindal Securities Private Limited),vide letter dated July 30, 2005 had informed the target company that the shareholding of its promoters mentioned in the offer document indicated the violation of Regulations 11(1) and 11(2) of the Takeover Regulations. It was further stated that the target company, vide letter dated September 3, 2005 had informed the petitioner that the main reason for increase in shareholding of promoter was because of the buy back of shares by the target company. In terms of the petition, it was stated that even if, the increase in the shareholding of promoters had occasioned on account of the buy back of shares, the law mandatory puts a obligation on such promoters to make an open offer for further acquisition of 20% shares.
Page 3 of 8 3. Thereafter, Mr. Mridu Hari Dalmia, vide letter dated August 24, 2007 filed the reply to the show cause notice on behalf of all the acquirers. The acquirers also appeared in the hearing before my predecessor on March 19, 2008 through their authorized representatives and made submissions. Subsequently, they filed also filed written submissions. Further, an opportunity of hearing was granted to the acquirers on April 1, 2009. However, on request of the acquirers, the same was adjourned to June 2, 2009, wherein Mr. V.S. Wahi, and Ms. Manju Sisodia, Advocates appeared before me on behalf of the acquirers. The learned counsel requested to consider the reply and the written submissions filed on behalf of the acquirers. Mr. R.K. Agarwal, Chartered Accountant of the target company was also present at the time of the hearing.
Page 4 of 8 the acquirers, since they had not participated in the buy back offer, the expression “additional shares or voting rights” in Regulation 11(1), in the context of the present case, should be interpreted as “additional shares and voting rights”.
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Source: SecMarx — sebi:WTM/KMA/CFD/212/01/2010. 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.