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2011 (9) TMI 1169 - Board - Companies LawShares acquired without making any public announcement - Violation Of the Regulation 11(1) of the Securities and Exchange Board of India Regulations, 1997 (the takeover code) - acquired 6.17 per cent of the equity capital - Appellant crossed the permissible creeping acquisition limit of 5 per cent in a financial year - HELD THAT:- The shares acquired by the Appellant company and the holding of the two Naras has to be clubbed for the purposes of Regulation 11(1) of the takeover code as they were acting in concert. When we do this, it becomes clear that the Appellant crossed the permissible creeping acquisition limit of 5 per cent thereby triggering Regulation 11(1) of the takeover code and not having made a public announcement, violated the said provision. The learned senior counsel for the Appellant is right only to the extent that the Appellant company did not act in concert with any promoter of the target company other than the Naras and that is of No. consequence. Even if the shareholding of the other promoters is excluded, the shareholding of the Naras and the Appellant together is enough to trigger Regulation 11(1). In this view of the matter, No fault can be found with the conclusion arrived at by the whole time member that Regulation 11(1) got triggered and the Appellant by not making a public announcement violated the said provision. The question posed in the opening part of the order is answered in the affirmative. Direction issued - The Board need not give reasons as to why such a direction is being issued because that is the mandate of Regulations 10, 11 and 12. However, if the issuance of such a direction is not in the interest of the securities market or for the protection of interest of investors, the Board may deviate from the normal rule and issue any other direction as envisaged in Regulation 44 of the takeover code. In that event, the Board should record reasons for deviation. In the case before us No reasons have been recorded for deviating from the normal rule and we find No ground for deviation. Thus, we modify the direction issued by the whole time member and direct the Appellant to make a public announcement to acquire the shares of the target company in accordance with the provisions of the takeover code. For this limited purpose, the Appellant shall now approach the Board within one week to comply with the procedural requirements in this regard. In the result, the appeal is dismissed and the direction issued by the whole time member modified as stated. There is No order as to costs.
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