sebi:WTM/PS/80/CFD/DIL/MARCH/2012
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Facts / Headnote
Notice dated April 29, 2011 disposed of without any directions
Provisions invoked
- s. 19
- s. 81(1)
Regulations
- Reg. 24
Parties
- Money Matters
Holding
The period of conversion of the detachable warrants could be altered by the company and the warrant holders without approval of the general body of shareholders of Money Matters. The notice dated April 29, 2011 was accordingly disposed of without any directions.
Full text
Page 2 of 8 company without the approval of the general body of shareholders of Money Matters. 3. Accordingly, SEBI vide its letter dated April 29, 2011 (hereinafter referred to as the ‘notice’), advised Money Matters to initiate process to inform all the remaining warrant holders, who have not exercised these warrants, to exercise the same and convert them into equity shares within three months. The notice further asked Money Matters to explain as to why appropriate action, as may be deemed fit, should not be initiated against it in terms of the provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’) and the regulations framed thereunder.
Page 3 of 8 6. The submissions of Money Matters, made during the oral hearing as well as in its reply and written submission, are summarized in brief below: - On December 15, 2007, the Board of Directors of Money Matters decided in favour of rights’ issue to the shareholders of the company along with detachable warrants. Though no approval of shareholders in the general meeting was required for the rights issue under Section 81(1) of the Companies Act, 1956, as a matter of abundant caution, the Board of Directors decided to seek the approval of general body of shareholders. - On January 12, 2008, the shareholders of Money Matters passed the resolutions regarding the rights issue and detachable warrants in the Extra Ordinary General Meeting. The shareholders had specifically and categorically authorized the Board to, inter alia, accept and give effect to such modification, changes, variations, deletions, additions, etc., as regards the terms and conditions of the issue as the board may decide in its absolute discretion in the best interest of the company, without being required to seek any further consent or approval of the shareholders. - Money Matters filed the Draft Letter of Offer on July 26, 2008 with SEBI and the stock exchange, for the rights issue to the existing shareholders of the company. After receipt of the final observation of SEBI on the Draft Letter of Offer, on February 21, 2009, the Board of Directors in its meeting approved the Letter of Offer to be dispatch
Page 4 of 8 Money Matters prior to the carrying out of modification in the terms of the warrants was dispensed with. - On December 16, 2009, the warrant holders in their meeting approved the extension of the tenure of the warrants by a period of 42 months wherein the detailed schedule for conversion of warrants was approved. - The detachable warrants issued were part of the Rights Issue for which the Letter of Offer was duly filed with SEBI, which provided for the procedure to be followed for modification in terms of warrants. The procedure for modification inter alia required compliance of two conditions viz., obtaining of the consent of the warrant holders by a Special Resolution passed at a meeting of the warrant holders and also that the modification should be acceptable to the company. These conditions have been complied with before modifying the terms of the warrants. - There was no need for seeking any clarification from SEBI before changing the tenure of warrants. - The warrant holders are none other than the shareholders of the company. At the relevant point of time, the warrant holders who approved in favour of the modification of the exercise period were holding 94.90% shares in the company. Further, no complaint from any of the shareholders regarding modification of exercise period of warrants has been received by Money Matters. - The promoters of Money Matters had relinquished all their rights in relation to 1,35,15,208 warrants allotted to them on October 11, 20
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Source: SecMarx — sebi:WTM/PS/80/CFD/DIL/MARCH/2012. 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.