SEBI Vs. RELIANCE CAPITAL LIMITED
LAWS(SB)-2003-3-4
SECURITIES APPELLATE TRIBUNAL
Decided on March 28,2003

Appellant
VERSUS
Respondents

JUDGEMENT

G.N.Bajpai, - (1.) RELIANCE Capital Limited (hereinafter referred to as the 'Acquirer') proposes to acquire 78,00,000 equity shares constituting 5.66% of the equity capital of BSES Limited (hereinafter referred to as the 'Target company') from RELIANCE Power Ventures Limited (hereinafter referred to as 'Transferor'). 1.2 The shares of the Target company are listed at The Stock Exchange, Mumbai, The National Stock Exchange of India Limited, The Stock Exchange, Ahmedabad, The Calcutta Stock Exchange Association Ltd., The Delhi Stock Exchange Association Ltd., Bangalore Stock Exchange Ltd., Inter-connected Stock Exchange of India Limited. The GDRs of Target company are listed on London Stock Exchange and FCCBs are listed on Society de la Bourse de Luxembourg.
(2.) The Acquirer made an application dated 28th February 2003 under sub-regulation (2) of regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the Regulations") to the Securities and Exchange Board of India (hereinafter referred to as "SEBI") seeking exemption from provisions of regulation 11(1) and compliance with the provisions of Chapter III of the Regulations. In the aforesaid application, the Acquirer, inter-alia, submitted the following: The Acquirer and the Transferor are both group companies of Reliance Industries Limited (RIL). RIL along with the Transferor and other persons acting in concert holds 44.12% equity capital of the Target company. The Transferor and Reliance Industrial Investments and Holdings Ltd (RIIHL) are wholly owned subsidiaries of RIL. RIL is the promoter and holds 47.20% shares/ voting rights in the Acquirer. This has been clearly stated/ disclosed in the prospectus dated 22 December 1994 issued by the Acquirer. The Transferor & RIL (as Acquirers) along with RIIHL made an open offer for purchase of 3,22,81,460 shares of Target company which was open from January 17, 2003 to February 15, 2003. In the aforesaid open offer valid applications received against the said offer aggregate to 14.10% of the Target company. As a result, the total shareholding of RIL, Transferor and other persons acting in concert would be 58.22% in Target company, subsequent to the acceptance of shares. Both the Acquirer and Transferor would constitute 'group' companies of RIL within the meaning of Reg. 3(1)(e)(i) and would be reflected as 'group' companies of RIL in the Annual report of Target company for the Financial Year ending March 31, 2003. Had the proposed acquisition taken place after publication of the Annual Report of Target company for year ending March 31, 2003, the said transfer would have been automatically exempt under Regulation 3(1)(e)(i). Proposed transfer is merely preceding such publication of Annual report of Target company and the proposed transfer will not have any consequence on the aggregate shareholding of the RIL group. The proposed transfer will not result in change in the management or control of Target company.
(3.) THE said application for exemption dated 28th February, 2003 was forwarded to the Takeover Panel on 28th February, 2003 in terms of sub-regulation(4) of regulation 4 of the Regulations. THE Takeover Panel vide its report dated 10th March 2003 has recommended, inter alia, as under: "On the facts stated in the applications, according to the applicant, RPVL and RCL are group companies within the meaning of Regulation 3(1)(e)(i) of the Takeover Code. On this basis, had the proposed acquisition taken place after the publication of the Annual Report of BSES Limited for the financial year ending 31st March, 2003, the Acquirer would have been entitled to automatic exemption. Subject to Securities And Exchange Board Of India satisfying that RPVL and RCL are group companies within the meaning of Regulation 3(1)(e)(i) of the Takeover Code, grant of exemption as sought is recommended.";


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