The Section 108-A of the Companies Act insists that the acquirer, either jointly or together, has to obtain the prior approval of the union government in case of the acquisition of shares exceeding 25 per cent of the total paid up capital of the other company.

In its letter to the GMM counsel, the DCA has turned down their contention that the earlier acquisition of 9.91 per cent share by GMM and its subsidiary could not be treated under 108-A while calculating 25 per cent norm as they have not yet got the shares transferred in their name. However, the DCA is of the opinion that despite the shares not being transferred by NILE management, both GMM and itssubsidiary will continue to be beneficial owners.

After hearing both the parties in the case, the DCA has also observed that GMM will fall under the expression of dominant undertaking used in the MRTP Act.

Meanwhile, SEBI has initiated an enquiry based on the complaint made by NILE management that KHL director had offered over and above the offer price to one of its share holders at Chennai. According to NILE sources, it has submitted all the records asked by SEBI in the case.

In April this year, KHL in concert with other group companies had made a public offer to buy 20 per cent of the paid-up equity of NILE Ltd at a price of Rs 40 per share. According to GMM sources, the offer could only attract about 11 per cent of the equity despite it revising the share price before closing the issue. Thus, GMM management is under the opinion that since the total exposure in NILE is just over 20 per cent, it will not come under the purview of the section 108A.

Earlier, GMM and Karamsad together acquired 9.91 percent of the total subscribed share capital of NILE. However, its board while raising dispute on the issue had decided not to transfer the shares in favour of the acquirers.