Panel upholds Sebi order on SCL

ENS ECONOMIC BUREAU

MUMBAI, APR 7: The appellate authority in the finance ministry has upheld the Sebi order which had directed five companies controlled by the Mehtas to make an open offer for 20 per cent of Saurashtra Cement's (SCL) equity.The authority delivered its verdict on April 5 where it held that adequate disclosures were not made to shareholders at the time of seeking approval for the preferential allotment which did not render it to get the exemption from the provisions of the Sebi takeover regulations. Fawn Trading Co Pvt Ltd, one of the five preferential allottees, and Saurashtra Cement Ltd had appealed against the Sebi order of January 15 which had directed the preferential allottees to make a public offer for 20 per cent shares in Saurashtra Cement. The preferential allottees are subsidiary companies of the Mehtas, the main promoters of SCL. "This appears to be a reasonable order in the light of the fact that public offers for acquisition are generally made for 20 per cent of the voting rights unless certainconditions are applicable. In the instant case, therefore, an order to acquire 20 per cent of the voting rights is not unreasonable," states the appellate authority order.

"Secondly, the directions under Regulation 44 and Section 11 B of the Act have to be seen in the context of violation of the regulations,'' it said. As the AGM notice did not have this information, the preferential allotment made by SCL was not eligible for the benefit of the non-applicability clause mentioned in Regulation 3 of the Sebi takeover guidelines.

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