MAC INFOTECH LIMITED Vs. STATE
SECURITIES APPELLATE TRIBUNAL
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(1.) FACTS OF THE CASE :
1.1 Mac Infotech Ltd, (hereinafter referred to as the 'Target Company') is a public listed company listed on the Stock Exchange Mumbai with a paid up capital of Rs. 22.50 lacs comprising of 2,25,000 equity shares of Rs.10 each. As informed by the Target Company vide its letter dt. 23.12.02 the total number of shareholders as on that day was 98 and there was no trading in equity shares of the company in the stock exchanges for the last 3 years.
1.2 Shri N. V. S. Rao and his associates (hereinafter collectively referred to as " the Acquirers") acquired 96,000 shares being 42.67% of the equity capital of the Target company on 04.04.2000.
1.3 The aforesaid shares were acquired through a Memorandum of Understanding (MOU) entered into on 4.4.2000 between Shri NVS Rao and his associates and Shri Shirish K Jhaveri and his associates, the promoters of the Target Company @ Rs.11.27/- per share.
(2.) SHOW CAUSE NOTICE
2.1 A show cause notice dated 24.02.03 was issued to the acquirers alleging inter alia that :
a) With the acquisition of 42.67% shares, the Acquirers' holding in the Target company has increased from NIL to 42.67% collectively (with persons acting in concert with them) and therefore, the said acquisition attracted the provisions of Regulation 10, 12 and 14(3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the Regulations").
b) The Acquirers have acquired the shares of Target company as aforesaid without making a public announcement and open offer as required by the provisions of the Regulations. Therefore, it was alleged that they have, prima-facie, violated the provisions of Regulation 10 and 12 read with Reg. 14(1) and Reg 14(3) and are liable for action under the Regulations and SEBI Act, 1992.
2.2 In light of these violations, vide said show cause notice dt. 24.02.03 the acquirers were directed to show cause as to why one or more or all actions under the Regulation 44 and Regulation 45(6) of the Regulations read with Section 11 B of the SEBI Act 1992, should not be initiated against them.
Reply TO SHOW CAUSE NOTICE
3.1 The Acquirers vide their letter dated 10.03.03 replied to the Show cause notice and inter alia, made the following submissions:
a) They have acquired the 96,000 shares from Shri Shirish K Jhaveri with the objective of reviving the company and commence the operation in software segment.
b) The equity shares of company were not traded for last 10 years and shareholders were not enjoying any liquidity in the equity shares of the company.
c) They had appointed a fully qualified Company Secretary and Chartered Accountant to advise and guide them on the acquisition of equity shares of company but they have not informed them about any of these guidelines.
d) To provide individual investor the option to exit, they were ready to acquire the shares from individual shareholders at their cost and are ready to pay the interest for the delayed portion.
e) The delay in adhering to Regulation 10, 12, 14(1) and (3) may be condoned and no penal action may be initiated against them as they are ready to acquire 20% of equity as proposed by Regulations from the existing shareholders at the purchase price plus interest.
4.1 The reply to show cause notice was not found to be satisfactory and accordingly, before taking a view in the matter, an opportunity of personal hearing was granted to the Acquirers on 09.04.03 adhering to the principles of natural justice.
4.2 During the hearing, the Acquirers have agreed to make an open offer in terms of the Regulations. Further vide their letter dated 22.04.03 they undertook to pay an interest of 12% p.a. to the shareholders.;
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