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2014 (9) TMI 1154 - Board - Companies LawConsolidation of holdings - exemption from obligation to make public announcement - doubtful acquisitions of shares - collective shareholding of the noticees in the Target Company - Held that:- The noticee's who were already in control of the Target Company did not acquire 5% or more in the financial year 2008-2009 and 2009-2010 when the acquisitions described in the SCN took place. Further, both the conditions of the second proviso of 11(2) {i.e. the acquisitions were through open market purchase in normal segment on the stock exchange and post acquisition shareholding of the noticees remained below 75%} were complied with in this case. The most of the acquisitions had happened when the doubts and ambiguities as mentioned above were prevailing in the market and such acquisitions were under bona fide belief rather than as an attempt to consolidate their shareholding in violation of Takeover Regulations,1997. Further, the acquisition with regard to which fault is found in this case is only for 27,633 shares (0.40%) of share capital of the Target Company The noticees are now entitled to avail the benefit of further creeping acquisition of 5% in every financial year. In this case, the noticees had acquired the shares which are found to be in violation of regulation 11(2) of the Takeover Regulations, 1997 at an average price of ₹ 97.14 per share. If the public announcement were to be directed under regulation 44 read with regulation 11(2) of the Takeover Regulations, 1997, the open offer would be at price of ₹ 129.05 per share (calculated in terms of regulation 20 of the Takeover Regulations, 1997 alongwith interest @ 10% per annum thereon) whereas the present average market price of the shares of the Target Company considering the trading on BSE and NSE in the last six months is ₹ 280/per share. Thus, the public announcement, if made now would be a mere formality. Direction to sell 27,633 shares of the Target Company in small lots on the concerned stock exchange and transfer of the entire proceeds of such sale of shares to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009 would be commensurate with the violation as found in this case. Since the Investor Protection and Education Fund is utilised for the purpose of protection of investors and promotion of investor education and awareness, this case the above directions would be in the interest of investors. In exercise of powers conferred upon under sections 19, 11 and 11B of the SEBI Act, 1992 and regulations 44 and 45 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 read with regulation 32(1)(h) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereby issue following directions to the noticees:- i. The noticees shall, jointly and severally, disinvest 27,633 shares of Sarla Performance Fibres Ltd. through sale to parties not connected/ related to them in small lots in trenches on the BSE and NSE ensuring that such sale does not disturb the market equilibrium; and transfer of the entire proceeds of such sale of shares to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009. ii. The noticees shall complete the sale of shares as directed above within 3 months from the date of this order and file a report to the SEBI detailing the compliance of the above directions within two weeks from the date of such compliance.
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