Hyderabad, Mar 11: The Andhra Pradesh high court in its interim order has stated that the open offer of Chennai-based India Cements Ltd (ICL) to acquire shares in the Andhra-based Raasi Cement Ltd (RCL) shall be finalised only after clearance from the centre and markets regulator Securities Exchange Board of India (Sebi).The division bench comprising justice D Reddappa Reddy and justice KB Siddapa passed the interim order yesterday on a petition filed by Raasi Cement challenging the constitutional validity of the Takeover Code 1997 issued by Sebi.
India Cements had made an open offer to acquire 20 per cent shares of RCL on March 2. The Hyderabad-based Raasi Cement, however, has stated that ICL already owns 18 per cent shares of the company either directly or through others.
It was contended that Section 108-a of the Companies Act prohibits acquisition of more than 25 per cent share of a private company without centre approval.
It was also contended that the Sebi takeover code was contrary to the provisions of the Companies Act and constitution. The court, however, has neither instructed the lead manager from buying the shares a fresh nor cancelled the already bought scrips, says a legal expert. The court order served on the respondents says, "Any action pursuant to public announcement dated March 2, 1998 issued by DSP Merrill Lynch Ltd to acquire the shares of the petitioner company, by India Cements Financial Services Ltd, ICL Securities Ltd, and Trishul Investments Pvt. Ltd, shall be with the previous approval of Sebi and ministry of company affairs (a wing of finance department)".
The writ petition, filed by Raasi Cement, pleaded the court to suspend the takeover operation by the lead manager and stay all further proceedings on the public announcement. Though the petitioner pleaded with the court that if the acquirer is permitted to proceed with the public announcement and purchase of shares before the disposal of the writ petition it would cause irreparable loss to both the company and shareholders, the court refused to suspend the operations and stay all further proceedings.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
