sebi:WTM/KMA/CFD/243/03/2010
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Facts / Headnote
Show cause notice dated January 18, 2010 disposed of without any directions
Provisions invoked
- s. 11B
- s. 19
Regulations
- Reg. 44
- Reg. 11
- Reg. 10
- Reg. 45
- Reg. 27
- Reg. 11(1)
- Reg. 11(2)
Parties
- Mr. Vikash Somani
- Mr. Suresh Kumar Somani
- Mrs. Jaishree Somani
Holding
The Whole Time Member held that the present case was not a fit one to issue directions against the acquirers as contemplated in the show cause notice dated January 18, 2010, and disposed of the notice without any directions.
Full text
Page 2 of 8 acquired 2,24,771 equity shares comprising 4.32% of the paid up share capital of the target company by way of open market purchases during the financial year ending March 31, 2009 (hereinafter referred to as Financial Year 08-09), in terms of the second proviso to Regulation 11(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations). Pursuant to the said acquisition, the shareholding of the acquirers along with the PAC in the target company increased from 67.40% to 71.72%. Thereafter, the acquirers, during the period commencing from April 1, 2009 to June 17, 2009 had further acquired 1,65,529 equity shares constituting 3.18% of the paid up capital (hereinafter referred to as Financial Year 09-10 acquisitions) of the target company under an erroneous belief that they could purchase 5% additional shares in each financial year, in terms of second proviso to Regulation 11(2) of the Takeover Regulations. Pursuant to the above mentioned acquisitions, the collective shareholding of the acquirers along with PACs increased from 67.40% to 74.90% of the paid up share capital of the target company and the same (7.5%) exceeded the limit of 5%, specified under second proviso to Regulation 11 (2) of the Takeover Regulations.
Page 3 of 8 Jarmi, Chief Operations Officer, Dalmia Securities Private Limited were also present during the hearing. The learned counsel did not dispute the facts of the case. While contending that no actions as stipulated under the show cause notice are warranted against the acquirers, the learned counsel stated that the acquisition of 3.18% shares of the target company during the Financial Year 2009-10 by the acquirers was in the belief that the second proviso to Regulation 11(2) of the Takeover Regulations enabled an annual purchase of 5% additional shares without making a public announcement. He contended that the said proviso nowhere specified the period within which the additional acquisition of 5% could be made. The learned counsel also submitted that pursuant to the clarification (SEBI Circular dated August 6, 2009), the acquirers made a public announcement (on August 12, 2009) at Rs. 123.40. According to him, the acquirers cannot be directed to divest their shares and also to make a public announcement at the same time/simultaneously. Thereafter, the learned counsel, vide letter dated March 2, 2010 forwarded the memorandum of
Page 4 of 8 iii. increase in the shareholding of the acquirers along with PACs from 67.40% to 74.90% of the paid up share capital of the target company.
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Source: SecMarx — sebi:WTM/KMA/CFD/243/03/2010. 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.