sebi:WTM/KMA/CFD/303/10/2010
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Facts / Headnote
Show cause notice disposed of; open offer approved; acquirer directed to disinvest 9.42% of share capital; adjudication proceedings initiated for failure to make public announcement
Provisions invoked
- s. 11B
- s. 19
Regulations
- Reg. 7
- Reg. 7(1)
- Reg. 44
- Reg. 10
- Reg. 12
- Reg. 14(1)
- Reg. 11
- Reg. 11(1)
- Reg. 45(6)
- Reg. 14(2)
- Reg. 44(a)
Parties
- Anjaniputra Ispat Limited
Holding
The acquirer violated Regulations 10, 11(1), 12 and 7(1) of the Takeover Regulations by failing to make a timely public announcement after acquiring 27.64% of shares and control, and by subsequently acquiring a further 9.42% without making the outstanding open offer. The acquirer was directed to disinvest the 9.42% shares acquired in violation of Regulation 11(1), and adjudication proceedings were initiated for the failure to make the public announcement.
Full text
Page 2 of 11 15% of the shareholding in the target company on November 19, 2008 without making a public announcement within four days of the acquisition, it was alleged that it had violated Regulation 10 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations). As the acquisition of 27.64% of the paid capital of the target company was not in accordance with the provisions of the Takeover Regulations, it was further alleged that the subsequent acquisitions (4.71% each on December 19, 2008 and April 3, 2009), were in violation of Regulation 11(1) of the Takeover Regulations. Further, as the acquirer had taken representation on the board of directors of the target company, it had also acquired control over it since November 2008, without making a public announcement, it was alleged that the acquirer had violated Regulation 12 of the Takeover Regulations. The acquirer was also alleged to have failed in complying with the disclosure requirements as mentioned in Regulation 7(1) of the Takeover Regulations. In view of the above, SEBI issued a notice dated April 6, 2010 to the acquirer to show cause as to why one or more or all action(s) under Regulation 44 read with Regulation 45(6) of the Takeover Regulations including the direction to continue with the open offer and to disinvest 6,06,000 shares representing 9.42% of the total share capital of the target company should n
Page 3 of 11 the time stipulated under Regulation 14(1) of the Takeover Regulations. It is an undisputed fact that, the acquirer while increasing its shareholding from 4.71% to 32.35% of the paid up capital of the target company by acquiring 17,79,692 shares on November 19, 2008 had triggered Regulation 10 of the Takeover Regulations and was required to make a public announcement within four working days as specified under Regulation 14(1) thereof. The acquirer, admittedly, had failed to do so. It had made the public announcement only on July 11, 2009. Further, the acquirer had also acquired control over the target company on November 19, 2008 when it was represented on the board of directors of the target company. However, it had failed to make the public announcement as required under Regulations 12 and 14(1) of the Takeover Regulations. The other issues to be considered are whether the acquirer had complied with:-
Page 4 of 11 i.e. an increase of more than 15% paid up capital of the target company. This indeed triggered Regulation 10 of the Takeover Regulations. The acquirer, therefore, was mandated to make the public announcement in respect of the said acquisition, as required under Regulation 10 thereof. The said Regulation is reproduced below:
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Source: SecMarx — sebi:WTM/KMA/CFD/303/10/2010. 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.