sebi:WTM/PS/75/CFD/FEB/2015
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Facts / Headnote
Confirmed the directions issued vide the interim order dated June 04, 2013 against Starcom Information Technology Limited, its directors, promoters and promoter group; Order to remain in force till further directions.
Provisions invoked
- s. 19
- s. 21
- s. 12A
Parties
- Starcom Information Technology Limited
- its directors
- promoters and promoter group
- Mr. Ziaulla Sheriff
Holding
SEBI confirmed the interim order dated June 04, 2013 against Starcom Information Technology Limited, its directors, promoters and promoter group for failure to achieve 25% minimum public shareholding. The confirmatory order shall remain in force till further directions.
Full text
Page 2 of 4 fully paid-up equity shares of Rs.10/- representing 17.52% of the total equity of the Company. Consequent to the above acquisitions, the promoter's shareholding increased to 88.72%. (d) Rule 19A(2) of the SCRR {and not rule 19A(1)} is applicable to the Company, as the Company was compliant earlier and had become non-compliant only on July 21, 2011 when the public shareholding fell below 25% because of the acquisition of shares by its promoter through the share purchase agreement and the open offer. Therefore, in terms of rule 19A(2), the Company had time till July 21, 2012 to raise its public shareholding. (e) The promoter had acquired the Company to implement his plans of venturing into Information Technology ("IT") business. Post the acquisition, the promoter with the help of experienced IT professionals got into the act of implementing the business plan by exploring joint venture, collaborations and strategic alliances that would fit into the core business plan of the Company. The Company has also appointed professional directors with finance background to provide guidance to the board to assist in strategising and implementing the plans. The aforesaid plans are currently under progress but no definitive agreements have been signed due to 'due diligence' issues. As a result, the Company is not able to firm up the financing plan and therefore the Company and its promoter are not able to comply with the MPS requirement within the stipulated period. (f) The promot
Page 3 of 4 (b) To comply with the MPS requirements, the promoter undertook two Offers for Sale (first OFS on June 05, 2013 and the second OFS on August 27, 2014). Post such offers, the promoter's shareholding was reduced to 38,36,857 equity shares representing 76.72%. According to the Company, despite such efforts by its promoter, the minimum public shareholding level of 25% could not be complied with. (c) The promoter needs to further dilute 86,407 equity shares in order comply with MPS requirement. (d) Considering the facts like difficult financial position of the Company, insufficient reserves and small size of the issue to the comply with MPS, a bonus issue or an institutional placement programme or OFS seemed to be a difficult task for the Company. (e) The promoter, with due permission of the board, proposes to sell his stake to an investor through secondary market transaction and sought the approval of SEBI to offload 86,407 equity shares held by him in the secondary market to 'an investor' for complying with the MPS requirement.
Page 4 of 4 transaction. This proposal has been made after more than a year of passing of the interim order against the Company for non-compliance with the MPS norms. Such proposal should have been made before June 03, 2013 for being considered by SEBI. Further, this is a quasi-judicial proceeding, wherein such proposals cannot be considered. As observed, the Company has taken steps (two OFS - first OFS on June 05, 2013 and the second on August 27, 2014) towards compliance only after the due date (i.e., June 03, 2013).
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Source: SecMarx — sebi:WTM/PS/75/CFD/FEB/2015. 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.