9911796707
TMI Blog2013 (12) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... hey were brought into force and a further window of one month, was provided by the Respondent for considering and clearing such issues as remained unconverted. The order has been issued with the approval of the Chairman, SEBI, in accordance with the SEBI (Delegation of Powers) Order, 2010 - The decision has been communicated by the officer who has signed the order - there we find no legal infirmity in passing the order – the order is in the nature of a reply to the application for exemption sought by the Appellants under Regulation 109 (c) of the ICDR Regulations - there is no question of violation of the principles of natural justice in passing the same – Decided against Appellant. - 203 of 2012 - - - Dated:- 28-6-2013 - JOG SINGH AND A.S. LAMBA , JJ. For the Appellant : R.S. Loona, Ankur Loona and Abhishek Borgikar. For the Respondent : Kumar Desai, Mihir Mody and Akhilesh Singh. ORDER:- PER : Jog Singh The appeal has been preferred by two persons. The Appellant No. 1, namely, Bombay Rayon Fashions Ltd., is a company incorporated under the Companies Act, 1956 with its registered office in Mumbai. Its shares are listed on the Bombay Stock Exchange Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant No.1 and stated to be holding 37.89% of the total capital. In April, 2009 AAA first acquired 18 million equity shares constituting 20.67% of the then total paid-up capital in Appellant No. 1 through preferential allotment of equity shares. As per the SAST Regulations, 1997, open offer to public shareholders of Appellant No. 1 was duly made by AAA (Open Offer-1). It was followed by subscription by AAA in two rounds of GDRs (non-voting) issued by Appellant No.1 in November 2009 and October 2010, respectively. This led to an aggregate of 33 million GDRs to be converted into an equivalent number of equity shares of Appellant No. 1. However, till this point of time, AAA remained a public shareholder only. 5. Further, in April 2011, AAA along with Ashwell Holding Company Limited, ("Ashwell") which is also a Promoter Group entity, gave another mandatory open offer as required by Regulations 11(1) and 12 of SAST Regulations, 1997 to the public shareholders of the issuer company (Open Offer-2). This was done by AAA with an intention to convert the aforesaid 33 million outstanding GDRs into equity shares. However, it would have given AAA voting rights in excess of the permissible cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing them to exercise twenty-five per cent or more of the voting rights in the target company but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permissible non-public shareholding. Explanation. - For purposes of determining the quantum of acquisition of additional voting rights under this sub-regulation,- (i) gross acquisitions alone shall be taken into account regardless of any intermittent fall in shareholding or voting rights whether owing to disposal of shares held or dilution of voting rights owing to fresh issue of shares by the target company. (ii) in the case of acquisition of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the acquirer/issuer company in the light of the coming into force of SAST Regulations, 2011. A further request was made to permit the issuer company not to forfeit 25% of the upfront payment made while issuing the warrants in question and to refund the same to the acquirer. Also, since the 18 months' time-limit for exercising the conversion option was expiring on April 4, 2012 it was requested that the same may be extended for a period of one month from the disposal of the said application dated March 14, 2012. 9. By letter dated April 17, 2012, the Respondent rejected the request for relaxation from the strict enforcement of Regulation 77(4) of the ICDR Regulations, 2009. The said letter was challenged by the Appellants before this Tribunal by way of Appeal No. 139 of 2012 and the same was disposed of by order dated July 5, 2012 setting aside the impugned order dated April 17, 2012 and remanding the matter back to the Respondent while directing it to pass a speaking order as to the request made by the Appellants. 10. Accordingly, the Respondent has once again reconsidered the whole matter and the request of the Appellants and has passed the impugned order dated August 10, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77(4) of the ICDR Regulations, 2009. In fact, it is the contention of the Respondent that Appellant No. 1 is required in its own interest and the interest of public shareholders to retain the amount paid as forfeit, consequent to allotment of the warrants in question. 13. We have heard both the learned counsel for the parties at length and have perused the appeal along with the documents brought on record. Chapter VII of the ICDR Regulations, 2009 deals with the subject of 'Preferential Issue' and Regulations 70 to 74 provide for the various conditions, including the methodology resorted to, for the purpose of allotment of 'Preferential Issue'. Regulation 75 deals with the "Tenure of Convertible Securities" and provides that it shall not exceed 18 months from the date of their allotment. Similarly, Regulation 77 provides for the payment of consideration and its forfeiture. Sub-regulation (4) of Regulation 77 specifically provides that in case the warrant holder does not exercise the option to take equity shares against warrants held by him, the consideration paid in respect of such warrants under sub-regulation (2) of Regulation 77 shall stand forfeited. Undoubtedly, this provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re brought into force and a further window of one month, was provided by the Respondent for considering and clearing such issues as remained unconverted. But no such application was preferred by Appellant No. 2 at that time. It is also relevant to note that Regulation 35 (2)(b) of the SAST Regulations, 2011 saves any right, privilege, obligation or liability acquired, accrued or incurred under SAST Regulations, 1997. But Appellant No. 2 faltered in not making any application to the Respondent seeking clarification or exemption till March 14, 2011 when a joint application was moved in collaboration with Appellant No. 2, knowing well that the 18 months period provided by the Regulation for conversion of warrants in question was on the verge of expiry. 16. It is our considered opinion that Appellant No. 2 has totally failed to satisfy the Respondent regarding any factor beyond the control of the issuer which would have prevented him from converting the warrants in question into shares. The Respondent, therefore, rightly did not exercise its jurisdiction to permit any relaxation in the matter. 17. At this stage it may be pertinently noted that relaxation is a valuable tool in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
