2019 (9) TMI 1314 - AT - SEBI

Offer price sought to be paid to the public shareholders calculated erroneously and contrary to the Takeover Regulations, 2011 - definition of frequently traded shares - whether the amended definition of Regulation 2(1)(j) would be applicable or the old definition would be applicable has to be considered and decided by some authority? - HELD THAT - In the instant case, we do not find as to how the offer price of ₹ 55.22 was arrived at by the merchant banker as approved by SEBI. Further, the question that the offer price should be considered as on the date the public announcement of the offer was made i.e. on November 17, 2017 or on the date when the Merger Agreement on May 24, 2016 was made is also required to be considered. Since, we find that the authority has not considered these aspects it will not be appropriate for this Tribunal to consider these propositions at this stage. We find that the appellant had written several emails to SEBI intimating them that the offer price was required to be calculated as per the unamended definition of frequently traded shares. It seems that SEBI has not dealt with the objections raised by the appellant while finalizing the offer price of the acquirer. We dispose of this appeal directing the appellant to file a consolidated representation afresh annexing the earlier emails.

Summary

Issues: Calculation of offer price under Takeover Regulations, 2011; Applicability of amended definition of "frequently traded shares"; Timeliness of public announcement by acquirer; SEBI's consideration of objections raised by appellant.

Calculation of Offer Price: The appellant sought to quash SEBI's order directing the acquirer and other respondents to revise the offer price from ?55.22 per share to ?79.58 per share along with interest. The appellant contended that the offer price was erroneously calculated, contrary to Takeover Regulations, 2011, and detrimental to public shareholders' interests. The Tribunal noted the discrepancy in the offer price calculation and the need to determine whether the amended definition of "frequently traded shares" or the old definition should apply. The Tribunal highlighted the importance of considering the date for fixing the offer price, whether on the date of public announcement or the date of the Merger Agreement.

Applicability of Amended Definition: The Tribunal emphasized the need for an authority to decide whether the amended definition of Regulation 2(1)(j) or the old definition should be applied in calculating the offer price. The Tribunal refrained from making a decision on this issue due to the lack of consideration by the relevant authority. The Tribunal also highlighted the appellant's communication with SEBI regarding the calculation of the offer price based on the unamended definition of frequently traded shares, indicating SEBI's failure to address these objections in finalizing the offer price.

Timeliness of Public Announcement: The appellant raised concerns about the acquirer's delay in making the public announcement, which was made 18 months after the stipulated period following the Merger Agreement. The Tribunal acknowledged the importance of determining the date for fixing the offer price concerning the timing of the public announcement and the Merger Agreement.

SEBI's Consideration of Objections: The Tribunal directed the appellant to file a consolidated representation, including the earlier emails sent to SEBI, within four weeks. SEBI was instructed to decide on the representation by a reasoned order after hearing all concerned parties within three months from the date of filing the representation along with a certified copy of the Tribunal's order. This decision aimed to ensure SEBI's proper consideration of the objections raised by the appellant regarding the offer price calculation.