sebi:WTMO/TCN/CFD/155/2009/JAN

SEBI · SEBI · 2005-07-01 · T.C. Nair, 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

Directions issued to make revised public announcement with revised price and interest; offer not withdrawn

Provisions invoked

• s. 11
• s. 106
• s. 16
• s. 94
• s. 31

Regulations

• Reg. 6
• Reg. 10
• Reg. 14
• Reg. 44
• Reg. 45
• Reg. 2
• Reg. 27
• Reg. 3
• Reg. 20
• Reg. 18
• Reg. 44(a)

Parties

• Scenario Communications Pvt. Ltd.

Holding

The acquirer was directed to make a revised public announcement under regulations 10 and 12 within two weeks of the BSE listing, determining the price under regulation 20 with reference to the two weeks traded price prior to the revised announcement and paying interest at 10% from 26.03.05 till actual payment to accepting shareholders.

Full text

2 1.2 On 28.05.05, Scenario Communications Pvt. Ltd. (acquirer) made a Public Announcement under regulations 10 and 12 read with regulation 14 of Takeover Regulations to acquire 2, 40,000 fully paid up equity shares representing 10.71% of the post preferential voting capital of target company at an offer price of Rs.10 (plus interest @ 10% for the delay in making Public Announcement) per fully paid up share. The draft letter of offer was filed under regulation 18 of the Takeover Regulations with SEBI on 10.6.05 by the acquirer through M/s Aryaman Financial Services Ltd. (the merchant banker). 1.3 While vetting the draft Letter of offer, SEBI noted that on 27.12.2004 the acquirer had acquired 20, 00,000 equity shares representing 89.29% of the paid up equity capital of the target company through preferential allotment. Pursuant to the said preferential allotment, the voting capital of the target company increased from 2, 40,000 equity shares to 22, 40,000 equity shares and the shareholding of acquirer increased from ‘Nil’ to 89.29% of the enhanced paid up equity capital of the target company. Further, the shareholding of the then existing promoter group in the target company decreased from 19.73% to 2.11% and the public shareholding decreased from 80.27% to 8.60%. 1.4 By letter dated 01.07.05, SEBI sought certain details from the merchant banker including the details as to whether the preferential allotment was in compliance with the then applicable clause 40A of the Listing A

3 shares issued on preferential basis and listing of shares allotted on preferential basis to the acquirer is under process with BSE. 1.6 Vide letter dated 21.10.05, SEBI informed the merchant banker that the reply made by them was not complete and not satisfactory and advised it to furnish the complete details with regard to the queries raised by SEBI in its letter dated 01.07.05 before the 28.10.05. The Merchant Banker vide letter dated 27.10.05 sought extension of time for 15 days for giving reply. Since no response was received from the merchant banker SEBI vide its letter dated 15.12.05, advised the merchant banker to furnish the complete details immediately. The merchant banker vide letter dated 07.04.06 replied that the target company and the acquirer are regularly following up the matter with BSE for “in principal” approval and requested for 30 days extension for submitting the reply. By letter dated 19.12.06, the merchant banker informed that it is taking up the matter with the acquirers as well as BSE and wish to resolve the matter at the earliest. 1.7 Thereafter, vide letter dated 27.01.07 the merchant banker inter alia submitted that with respect to compliance of clause 40A of the Listing Agreement the target company has given following undertakings to BSE : (i) To increase the existing public shareholding level of 10.74% to the minimum stipulated level of 25% within the time as may be permitted by the BSE. (ii) Not to dilute in any way its public shareholding exc

4 method which does not adversely affect the interest of minority shareholders. (iv) It was also submitted that the target company shall take (c) and (d) methods mentioned above only after obtaining prior approval from the BSE. 1.8 Vide letters dated 16.04.07 and 23.04.07 the merchant banker informed that the BSE has given personal hearing to the target company in the matter on 16.03.07 and the BSE had asked the acquirer to submit the valuation report and other papers respectively. On submission of the said report and the papers BSE will be taking its decision in the matter. Vide letter dated 12.09.07, the merchant banker informed that regarding the “in-principal approval” the

Source: SecMarx — sebi:WTMO/TCN/CFD/155/2009/JAN. 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.