9911796707
TMI Blog2015 (6) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 5 of the SEBI (Prohibition of Fraudulent and Unfair Practice Relating to Securities Market) Regulations, 2003 ("the Regulations") into the proposed delisting of the equity shares of M/s. Spice Mobility (Respondent No.4, hereafter "Spice") from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) (Respondent Nos. 2 and 3), not to grant any approval to the proposed delisting of the equity shares of Spice from the BSE and NSE pending such investigation and also to direct stay of the process of delisting till pendency of such investigation by the SEBI is sought. 2. The petitioners contend that they became aware, on 24.01.2015, of a postal ballot notice dated 09.01.2015 uploaded on the website of the second and third res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid up equity share capital, are listed as public shareholders, but in reality the trusts are under the control of the promoter (the seventh respondent, holding 74.36% of the issued and paid up capital of the company) of Spice, which is allegedly using the votes cast by these trusts to delist the shares from BSE and NSE. It is also argued that such trusts cannot be characterised as public shareholders as that would be in violation of Regulation 3(9) of the SEBI (Share Based Employee Benefits) Regulations, 2014. The petitioners also submit that during the period July 1, 2014 to December 31, 2014, 10,20,617 shares have been traded in 8952 trades and that 10,20,617 shares in a period of six months cannot be considered as limited volume ("there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 of the petitioners, Spice issued a letter dated 06.02.2015 answering the claims and allegations of the petitioners. Spice contended that the offer price would be determined through book building process after determination of floor price by the promoters and the Merchant Banker, in accordance with the SEBI (Delisting of Equity Shares) Regulations, 2009 and hence, all public shareholders of the equity shares, sought to be delisted shall be entitled to participate in the book building process in adherence to Schedule II of the SEBI (Delisting of Equity Shares) Regulations, 2009. The shareholders so participating may place their bids at a price which may be at or above the floor price. The shareholder also has the option to stay invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners that the proposed delisting would cause heavy financial loss cannot be accepted for the reason that in the instant case, acquiring shares or divesting their holding from a company is a voluntary act which is carried out at the option of a shareholder. Neither Spice nor the seventh respondent, have not concededly, forced the petitioners to divest from the company. Spice in its letter dated 06.02.2015, has stated that the delisting and the consequent determination of the offer price, floor price and the final offer price would be in accordance with the extant SEBI regulations, i.e. through book building process and that the shareholders including the petitioners have a right to participate in the same (Regulation 14(1), SEBI (Delisting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule provided for in the Securities Contracts (Regulation) Rules, 1957. The petitioners allege that characterisation of the trusts as public shareholders is in violation of the above mentioned provision. The petitioners‟ case is that the order of the Bombay High Court in Pankaj Bhatt (supra) is similar to the case at hand. In that decision the Court while allowing the claim for injunction against delisting, had sufficient reasons to believe that injury might be or may already have been caused. Here, we note that the power of the SEBI to order for an investigation as envisaged in Regulation 5 of the Regulations is discretionary power. Regulation 5 of the said regulations is reproduced below for ease of reference: "5.Where the Board, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
