sebi:WTM/SR/SEBI/CFD/169/10/2015
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Facts / Headnote
Violations of Regulations 7(1), 7(1A) read with 7(2), and 11(1) read with 14(1) of the SAST Regulations, 1997 found; direction to make an open offer not issued; adjudication proceedings directed to be initiated against the Noticees under Regulations 44 and 45 of the SAST Regulations, 1997.
Provisions invoked
- s. 11(4)
- s. 11B
- s. 11D
- s. 12
- s. 15H
- s. 24
Regulations
- Reg. 7
- Reg. 7(1)
- Reg. 6
- Reg. 44
- Reg. 11
- Reg. 199
- Reg. 10
- Reg. 14(1)
- Reg. 45
- Reg. 11(1)
- Reg. 7(2)
- Reg. 201
- Reg. 11(2)
- Reg. 32
- Reg. 44(a)
Holding
The Noticees (eleven promoter group entities acting in concert) violated Regulation 7(1) read with 7(2), Regulation 7(1A) read with 7(2), and Regulation 11(1) read with 14(1) of the SAST Regulations, 1997 by failing to make timely disclosures and a public announcement after their collective shareholding increased from 53.85% to 56.04% upon conversion of warrants on April 6, 2011. However, no direction to make an open offer was issued; instead, adjudication proceedings were directed to be initiated.
Full text
Page 2 of 21 Rs.45/- per share), of the target company at the sole option of the warrant holders at any time within a period of eighteen months from the date of allotment. The warrant holders were required to pay upfront an amount equivalent to 25% of the total consideration per share warrant, i.e. Rs. 13.75 per share warrant (each share warrant price being Rs. 55/-). They were also required to pay the balance 75% i.e. Rs. 41.25 per share warrant before the date of conversion. In case the option to acquire the equity shares was not exercised by the warrant holders, the aforesaid upfront amounts paid would be forfeited. On April 6, 2011 the aforesaid six of the eleven promoter group entities acquired 6,25,000 equity shares of the target company upon conversion of their portion of warrants (hereinafter referred to as "the acquisition"). Consequently, the collective shareholding of the entire promoter group (eleven entities) in the target company increased from 53.85% to 56.04%.
Page 3 of 21 entities failed to make the aforesaid disclosures to the target company and the stock exchange(s), they were alleged to have violated the provisions of Regulation 7(1) of the SAST Regulations, 1997,
Page 4 of 21 warrants allotted to them. It was the prior understanding between them that the resultant increase in the overall paid-up capital of the target company would ensure that there would be no increase in the percentage holding of the promoter group.
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Source: SecMarx — sebi:WTM/SR/SEBI/CFD/169/10/2015. 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.