sebi:WTMN/7/CFD/6/04

SEBI · SEBI · 2004-03-12 · T. M. Nagarajan, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Representation rejected; buy-back offer held lawful and not restrained, declared void or stopped

Provisions invoked

• s. 19
• s. 77
• s. 77A
• s. 77A(1)

Regulations

• Reg. 199

Holding

SEBI held the PunCom tender-offer buy-back of up to 40,07,855 shares at Rs.90 per share was in compliance with Section 77A and the SEBI Buy-Back Regulations and declined to restrain it or declare it non est, void and a nullity.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ In The Matter Of Buyback Of Equity Shares Of M/s Punjab Communications Limited Jun 16, 2004 | Orders : Orders of Chairman/Members SECURITIES AND EXCHANGE BOARD OF INDIA

shareholder/ investor, numbering about 28,000 across the country. (h)               The promoter had, admittedly, suffered losses and the products manufactured by PunCom had become uncompetitive. Rather than utilizing the said surplus a PunCom to buy back its own shares, it would have been rather better and prudent on the part of the company and its promoters to utilize the said amount for th its products and its manufacturing capabilities more competitive and profitable. (i)                 PunCom has committed the violation of the mandatory provisions, more specifically section 77A of the Companies Act and the provisions of the Securities and India Act, 1992 and the rules and regulations, framed there under from time to time. The requisite permissions were taken by the promoter, without presenting

elaborated that the same clearly proved that PunCom had been consistently making losses in the years after the public issue and was now proposing to buy back the sha the share premium account, which was created out of the share premium received in the public offer in 1994, in violation of Section 77(A)(1) of the Companies Act, which me that no buy back of any kind of shares should be made out of the proceeds of an earlier issue of the same kind of shares. Shri Khanna also stressed upon the point that ev buy back was made in compliance with all the laws existing as on date, it was not in compliance with the law of equity as the general shareholders were getting Rs.90/- per s the shares they purchased at Rs.250/- while the promoters would get Rs.90/- per share for the shares which did cost them only Rs.0.62 per share. It was stressed that ground alone, the buy back should not be allowed. However, the complainant stated that in case the promoters were not allowed to participate in the buy back offer then could be allowed to continue. 5.3 Oral submissions of the Company and the Merchant Banker PunCom as well as the KISL reiterated their earlier written submissions and stated that the complainant had made a wrong statement as regards the date of purchase of th held by her in as much as the said shares had been transferred in her name by her husband Shri Karnail Singh, the original owner of the said shares, on 17 February, 1 price of Rs.58/- per share, and not purchased by her for

Source: SecMarx — sebi:WTMN/7/CFD/6/04. 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.