Sebi, which resumes hearing in the case on September 1, is likely to make a detailed examination of the various aspects to establish whether the deal had triggered off the takeover code.

``If a person, acting on his own, or along with persons acting in concert, either acquires, or agrees to acquire more than 10 per cent of the share capital of a listed company, then a public offer will have to be made.

Sebi's takeover regulations with regard to public offering and announcement may have been triggered off here in case it is established that Raju and the directors of these nine companies acted in concert,'' says Virender Ganda, vice-president of the Institute of Company Secretaries of India (ICAI).

Under the definition of `persons acting in concert' as spelt in the Takeover Code, there are several criteria which need to be fulfilled, he points out. Raju has maintained that the nine investment companies did not fall under the category of `persons acting in concert' when the transfer was effected.The Code defines `persons acting in concert' as those ``who for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding, directly or indirectly cooperate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company''.

Under this category, it identifies a company, its holding company or subsidiary or company under the same management; a company with any of its directors, or any person entrusted with the management of the funds of the company; directors of such companies and their associates; mutual fund with sponsor or trustee or asset management company; foreign institutional investors with sub-account(s); merchant bankers with their clients as acquirer; portfolio managers with their clients as acquirers; venture capital funds with sponsors and banks with financial advisers and stockbrokers of the acquirer.

Experts presume that Raju must have taken the obvious precautions like ensuring that the nine companies do not have common directors and shareholders. Under Section 372 of the Companies Act, companies under the same management can not acquire more than 30 per cent of another public company without prior approval of the central government.

It is now up to Sebi to make detailed technical investigation with regard to the ownership and source of funds of the nine companies to find out whether the Takeover Code was contravened or not. However, the lack of transparency and the hurried manner in which Raju transferred the shares may weaken his case, according to a former senior official of the Delhi Stock Exchange.``Another important factor to be kept in mind is whether the board of Raasi Cement had approved the deal or not. Besides, they will also need to look into when the nine companies were incorporated,'' says Ganda.

Also, there is a lacuna in the Companies Act, particularly in Sections 372 and 292, experts say. Acquisition of shares by way of inter-corporate investment requires prior approval from shareholders and the central government in some cases. In contrast, no restriction is placed whatsoever on the board of directors for selling the investment thereby meaning that Raasi directors (prior to its merger with India Cements) may not have have violated the Companies Act by transferring the shares to the investment companies.