sebi:WTM/KMA/CFD/307/10/2010
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Facts / Headnote
Show cause notice dated February 5, 2010 issued to Premier Limited disposed of without any directions
Provisions invoked
- s. 19
- s. 41
- s. 87
- s. 150
Regulations
- Reg. 4
- Reg. 44
- Reg. 10
- Reg. 12
- Reg. 2(1)(b)
- Reg. 11(1)
- Reg. 20
Parties
- Premier Limited
Holding
The noticee, Premier Limited, was not held liable for contravening Regulations 11(1) and 12 of the Takeover Regulations in respect of 8,40,25,000 shares said to have been gifted to it, and the show cause notice was disposed of without any directions.
Full text
Page 2 of 14 (8,40,25,000 shares) to the acquirer. It was alleged in the notice that, pursuant to an agreement, the entity by accepting the gift, had acquired 8,40,25,000 shares of the target company and consequently, its shareholding in the target company had increased from 30.12% to 62.08%. It was further alleged that as the aforesaid transfer was by way of gift and not as per the pricing as determined under Regulation 20 of the Takeover Regulations, the entity could exercise more control than what it was entitled prior to the ceding of control and that the cessation of joint control to a single control had to be treated as change in control. It was further alleged that the said acquisition was made without making a public announcement and thus, the entity violated Regulations 11(1), 12 and 14(1) of the Takeover Regulations. Hence the notice. M/s Desai & Diwanji, Advocates, filed the reply dated April 9, 2010 to the notice, on behalf of the entity. Thereafter, an opportunity of hearing was granted to the entity on June 2, 2010. However, on its request, the same was adjourned to June 15, 2010 and on the said date, Mr. Shyam Mehta, Advocate appeared before me on behalf of the entity and made elaborate submissions. Mr. R.M. Tavhare and Ms. Namita Tiwari were also present during the hearing. Thereafter, M/s Desai & Diwanji, Advocates, filed written submissions on behalf of the entity, vide letter dated June 22, 2010.
Page 3 of 14 b. In the year 1999, the transferor withdrew itself from the joint venture and handed over the share certificates and transfer deeds in respect of 8,40,25,000 equity shares constituting 31.96% of the paid up equity capital of the target company to the entity.
Page 4 of 14 legal owner of the shares, so long as his name remains in the Register of Members of the company. According to him, the mere execution of the share transfer deeds by the transferor cannot amount to an acquisition or an agreement to acquire those shares unless such transfer deeds are signed by the transferee and lodged with the company for registration of the transfer. The entity further stated that there was no agreement to transfer the impugned shares and that the transferor had only handed over the shares along with the signed transfer deeds to the entity on July 15, 1999. It was the submission that, till date, the entity has not even signed the said transfer deeds or lodged them for transfer with the target company. It was for this reason, the entity contended that, it had neither accepted the gift nor acquired the shares of the target company, as stated in the notice. According to the entity, even SEBI, while rejecting its application for the grant of exemption under Regulation 4 of the Takeover Regulations observed that the entity had acquired only the beneficial interest in the shares. It is further submitted that even in the latest balance sheet of the entity for the year ended March 31, 2009, under the heading ‘Investments’, it had only shown its original investments in the target company and that the shares of the transferor (so called gifted shares) were not shown as its investments. This, according to the entity would indicate that it had never treated
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Source: SecMarx — sebi:WTM/KMA/CFD/307/10/2010. 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.