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2022 (3) TMI 412 - AT - Insolvency and BankruptcyDirections to comply with the resolution plan - sale of shares - HELD THAT:- Resolution Plan provides two structures (methods) for allotment of equity shares to the Resolution Applicant. As per first structure (method) Resolution Applicant has to subscribe 75% of equity shares that is 89,70,44,238. The Existing Promoter Group equity share is 2.14% that is 256,53,813 was to be in rest 25% shareholding. The first structure was to take place in event erstwhile Existing Promoter Group shareholding is not counted towards promoter shareholding for the purposes of Regulation 2015. It is noticed the relevant provisions of Regulation 2015 as well as the provisions of Securities Contracts (Regulation) Rules, 1957. The Securities Contracts (Regulation) Rules, 1957, Rule 19A provided that “Every listed company other than public sector company shall maintain public shareholding of at least twenty five percent”. The Bhushan Steel being listed company, it was obliged to maintain public shareholding of at least 25%. The Regulation clearly prohibit public shareholding of Promoter pursuant to reclassification to be counted towards achieving compliance with minimum public shareholding requirement under Rule 19A as noted above. Thus, shareholding of 2.14%, which was held by erstwhile Promoter Group, even if they were treated as public shareholding cannot be counted towards 25% shareholding, which is statutory requirement to be maintained. Thus, Structure one on 15.05.2018, on the date when Plan was approved ok on 18.05.2018, did not permit subscribing of 75% shareholding by the Tata Steels - there are no error in the action of Respondents in proceeding to opt to acquire the equity shares of the Promoter Group by asking them to sell the equity shares @ INR 2/- after subscribing 72.65% of equity shares, so that after purchase of the equity shares of Existing Promoter Group, the Respondent may have 75% of shareholding leaving 25% to the public shareholding. The Resolution Plan as per Section 30(2) (e) of the Code has to be in accordance with law for the time being in force. Section 30(2) sub-clause (e) mandates – “does not contravene any of the provisions of the law for the time being in force”. The implementation of the Resolution Plan has to be thus in accordance with the existing law and the Respondent could not have implemented the Plan following Structure one in para-3, which could have been in contravention of Regulation 31A(7)(b) of 2015 Regulation. Thus, the implementation of Resolution Plan by following Structure two as provided in para 3 of Annexure 5 was fully permissible and no exception can be taken by the Appellants when they are asked to sell their equity shares as per Plan itself - there are no error in the judgment of the Adjudicating Authority allowing the Application filed by Respondent while holding that erstwhile Promoters have to sell their shares to the Applicant (Tata Steel) @ INR 2/- per share. The Appeal is dismissed.
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