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2019 (2) TMI 1044 - HC - SEBIDetermination of offer price in accordance with Regulation 8 (2) (c) of SAST Regulations, 2011 - Appeal to the Securities Appellate Tribunal - Offer Price of ₹ 61.73 per share, as being offered by the LIC - Held that:- In the present case, the shares of the target company i.e. IDBI are listed on Bombay Stock Exchange Ltd. (BSE) and National Exchange of India Ltd. (NSC). Union of India is presently in the control of the target company. LIC was holding 67,36,20,000 shares in the target company, representing 14.90% of the voting rights in the target company, as a public shareholder of the target Company. The Board of Directors of the target company in their meeting held on 4.10.2018, authorized the issuance and allotment of equity shares aggregating upto 51% of the fully diluted voting share capital to LIC by way of a preferential issue. Therefore, an open offer was required to be made in terms of Regulation 3 (1) and (4) of the SAST Regulations, 2011. The LIC has issued an announcement of an open offer on 4.10.2018 in terms of Regulations 13 (2) (g) of the SAST Regulations, 2011. As needed in terms of Regulation 16 of SAST Regulations, 2011, LIC through its Merchant Banker i.e. ICICI Securities Limited, filed a draft letter of offer with SEBI on which SEBI issued its observation letter on 7.12.2018 in terms of Regulations 16 (4) of the SAST Regulations. Thus, the price to be paid to the shareholders of the target company for acquisition of their shares in the open offer made by the LIC, has been determined in terms of Regulation 8 of the SAST Regulation, 2011. It appears that the case of the petitioner proceed on the premise that in terms of the provisions of LIC Act, 1956 and resultant disclosure made by the LIC in clause 4.5 of the letter of offer, to the effect that LIC is wholly owned by the Central Government, therefore, the Central Government is the 'person acting in concert' with LIC within the meaning of Regulation 2 (q) of the SAST Regulations, 2011, for the purpose of present acquisition of control of the target company by the LIC. On this assumption, the petitioner is of the view that since on 25.5.2018, the Government of India acquired 1,09,73,26,649 number of shares of the target company at the price of ₹ 71.82/- per share, thus, the said price of ₹ 71.82/- per share paid by the Government of India being 'person acting in concert' of LIC will fall within Regulation 8 (2) (c). The petitioner is of the view that price of ₹ 71.82/- per share, being highest amongst all parameters laid down in Regulation 8 (2) (a) to (f) should be the price of open offer. Examining the term “persons acting in concert” DAIICHI SANKYO CO. LTD. VERSUS JAYARAM CHIGURUPATI [2010 (7) TMI 289 - SUPREME COURT OF INDIA] has observed that the deeming provision does not provide that the mere existence of a holding-subsidiary relationship is sufficient to create this relationship. The deeming provision does not dispense with the requirement that the parties must have cooperated for the common objective or purpose of substantial acquisition of shares, and held further that this must be established as a matter of fact, on an analysis of the conduct of the parties. In addition, the Apex Court found the relationship of “persons acting in concert” must exist not at the time of the public announcement, but at the time of acquisition, for the purposes of Regulation 20(4)(b) of SAST Regulations, 2011. On applying the aforesaid ratio to the facts of the present case, it can easily be inferred that Union of India cannot be term as 'person acting in concert' with LIC and consequently, Regulations 8 (2) (c) of the SAST Regulations, 2011 has been applied correctly in the present case and the Offer Price of ₹ 61.73 per share, as being offered by the LIC is correct as per the justification given at para 6.1.5 and 6.1.6 of the Letter of Offer, the said price has already been affirmed by a judicial verdict.
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