2007 (8) TMI 457 - HC - Companies Law

Requirements with respect to listing of securities on a recognised stock exchange - Held that - Having regard to a categoric undertaking letters issued by the first respondent-transferee-company, there is no reason as to why the first respondent-transferee-company should not be directed to ensure that the compliance reported by it before the learned Single Judge which persuaded the learned Judge to pass the impugned order, should not be directed to be carried out to its full extent without any deviation, by prescribing time limit in order to enable the appellant/MSE herein to comply with the direction of the learned Single Judge in the order dated 20-9-2002 passed in Company Application No. 576 of 2002. In Company Petition No. 79 of 2001 for listing of the first respondent-transferee- company. With that view, we direct the first respondent-transferee-company to comply with its undertaking as agreed.

Summary

Issues: Compliance with Scheme of Amalgamation, Exemption from Securities Contracts Rules, Undertakings by Transferee Company

Compliance with Scheme of Amalgamation:
The case involved the Madras Stock Exchange Limited (MSE) appealing against an order related to the Scheme of Amalgamation. The first respondent, a transferee company, sought direction for compliance with the Scheme of Amalgamation and exemption from rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957. The respondent highlighted SEBI guidelines to support their request for exemption. The learned Single Judge directed MSE to comply with the Scheme of Amalgamation and grant exemption to the transferee company.

Exemption from Securities Contracts Rules:
During the proceedings, it was brought to attention that new guidelines by SEBI required a specific allocation of the unlisted transferee company's capital to public shareholders of the listed transferor company. The communication from SEBI directed MSE to ensure compliance with this requirement for relaxation of rule 19(2)(b) of the Rules. The transferee company provided undertakings to comply with the guidelines and increase public holding to more than 25%, either through right shares, book building process, or Initial Public Offering.

Undertakings by Transferee Company:
Based on the unequivocal undertakings provided by the transferee company, the court directed them to ensure compliance within three months. Upon compliance, MSE was directed to adhere to the Single Judge's order within four weeks. The judgment disposed of the Original Side Appeal with no costs, emphasizing strict adherence to the undertakings given by the transferee company for compliance with the Scheme of Amalgamation and SEBI guidelines.

This detailed analysis of the judgment highlights the issues of compliance with the Scheme of Amalgamation, exemption from Securities Contracts Rules, and the significance of undertakings provided by the transferee company in ensuring regulatory compliance and listing of shares.