sebi:WTMN/75/CFD/8/04

SEBI · SEBI · 2003-12-06 · T. M. Nagarajan, Whole Time Member

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Facts / Headnote

Report dated August 27, 2003 taken on record; no violation found; equity shares allotted on August 21, 2003 subjected to 3-year lock-in from date of allotment

Provisions invoked

• s. 19
• s. 81

Regulations

• Reg. 11
• Reg. 3
• Reg. 10
• Reg. 12
• Reg. 44
• Reg. 1
• Reg. 11(1)
• Reg. 3(4)
• Reg. 2(c)
• Reg. 3(1)
• Reg. 199
• Reg. 2(1)(k)
• Reg. 2(k)
• Reg. 3(1)(c)

Parties

• Ramco Industries Ltd
• Shri P R Ramasubrahmaneya Rajha
• Shri P R Venketrama Raja

Holding

The August 21, 2003 acquisition of shares by Ramco Industries Ltd, Shri P R Ramasubrahmaneya Rajha and Shri P R Venketrama Raja through conversion of warrants allotted on May 18 and 24, 2002 was deemed covered by the then-existing Regulation 3(1)(c) exemption. The report dated August 27, 2003 was directed to be taken on record with the allotted equity shares subjected to a 3-year lock-in from the date of allotment.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER IN THE MATTER OF ACQUISITION BY RAMCO INDUSTRIES LTD AND OTHERS OF SHARES/ VOTING RIGHTS OF RAJAPALAYAM MILLS LTD. THROUGH CONVERSION OF WARRANTS ALLOTTED ON PREFERENTIAL BASIS. 1.0              BACKGROUND 1.1              Ramco Industries Ltd. (promoter company of Rajapalayam Mills Ltd – hereinafter referred to as RML) submitted to SEBI a report dated August 27, 2003 under Regulatio SEBI (Substantial Acquisition of shares and Takeovers) Regulations 1997 (hereinafter referred to as “Takeover Regulations”) claiming exemption for acquisition of 4,00,00 shares of Rs. 10/- each representing 11.39% of the enhanced voting capital of the Rajapalayam Mills Ltd. (hereinafter called the Target Company) on August 21, 2003, pur conversion of warrants allotted on May 10, 2002 on preferential basis. It was then observed that S/Shri P R Ramasubrahmaneya Rajha and Shri P R Venketrama Ra belonging to promoter group) had also similarly acquired 50,000 equity shares each representing 1.42% of the enhanced voting capital of the Target Company on August 2 As a result of the said acquisition the collective shareholding of Ramco Industries Ltd and Sarvashri P R Ramasubrahmaneya Rajha, Chairman of Ramco Industries Ltd Venketrama Raja, Vice Chairman and Managing Director of the said company (hereinafter collectively referred to as the “Acquirers”) was found to have increased by 11.17 17.75% to 29.46%) of the votin

exemption for acquisition of 4,00,000 equity shares of Rs. 10/- each representing 11.39% of the enhanced voting capital of the Rajapalayam Mills Ltd. (hereinafter called the Target Company) on August 21, 2003, pursuant to conversion of warrants allotted on May 10, 2002 on preferential basis. It was then observed that S/Shri P R Ramasubrahmaneya Rajha and Shri P R Venketrama Raja (also belonging to promoter group) had also similarly acquired 50,000 equity shares each representing 1.42% of the enhanced voting capital of the Target Company on August 21, 2003. As a result of the said acquisition the collective shareholding of Ramco Industries Ltd and Sarvashri P R Ramasubrahmaneya Rajha, Chairman of Ramco Industries Ltd and P R Venketrama Raja, Vice Chairman and Managing Director of the said company (hereinafter collectively referred to as the “Acquirers”) was found to have increased by 11.17% (from 17.75% to 29.46%) of the voting share capital of the Target Company i.e. more than the permissible annual creeping limit of acquisition of 5% specified in Regulation 11(1) of the Takeover Regulations. 1.2 The Target Company is a listed company, with its shares listed at the Madras Stock Exchange and The Stock Exchange, Mumbai. 2.0 SHOW CAUSE NOTICE 2.1 The Acquirers did not make a public announcement to acquire 20% of the voting capital of the company from the public as envisaged in the Takeover Regulations. A show cause notice was, therefore, issued on November 14, 2003 to the Acquir

the holder thereof to receive equity shares at a later date, pursuant to Regulation 2(1)(k) of the Regulations. · By virtue of the preferential issue, the Promoter group has not gained any fresh control over the Target Company. · All the requirements set out in regulation 3(1) ( c) of the Regulations were complied with by RML. · The issue of share warrants was in itself an agreement to acquire shares at a later stage. This was the point of acquisition at which the Regulations were triggered but for the exemption under Regulation 3 (1) ( c). · The exemption under Regulation 3(1) ( c) of the Regulations was already availed of and cannot be set at naught by a subsequent removal of the exemption in September 2002. · Vested rights accrued in the hands of promoters in relation to conversion of warrants into equity shares, cannot be altered by subsequent amendment to the Regulations. · It is a well settled law that accrued rights cannot be affected with retrospective effect by any exercise of sub-ordinate legislative power and hence the amendment to the regulations cannot affect such accrued rights in favour of the promoters. · Parliament had not conferred on SEBI, under sections 29 and 30 of the SEBI Act, the right to issue Sub-ordinate Legislation on retrospective basis. · Therefore, the deletion of Regulation 3 (1) (c) of the Regulations does not operate to defeat the rights of the above Promoters to covert the warrants issued prior to such deletion into equity shares on a subseq

Source: SecMarx — sebi:WTMN/75/CFD/8/04. 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.