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2015 (6) TMI 259 - DELHI HIGH COURT

2015 (6) TMI 259 - DELHI HIGH COURT - TMI - Delisting of the equity shares - Regulation 5 of the SEBI (Prohibition of Fraudulent and Unfair Practice Relating to Securities Market) Regulations, 2003 - Held that:- The allegation of the petitioners 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. Ne .....

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Shares) Regulations, 2009).

Since the Petitioners have represented to the SEBI, which has not made any order in that regard, it would be inappropriate for this court to assume that the said body would not act, act improperly or act in a manner contrary to the Regulations. Any direction in exercise of judicial review at this stage would be based on the assumption of objective facts. All that this court can do is to require the SEBI to deal with the Petitioners‟ representation, in .....

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. 1. In these proceedings under Article 226 of the Constitution of India, a writ, order or direction in the nature of mandamus directing the Securities and Exchange Board of India (SEBI), the first respondent herein, to order an investigation under 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 ) fr .....

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dents seeking approval through postal ballot for voluntary delisting of the equity shares of Spice, from BSE and NSE. They sent a protest letter dated 27.01.2015 demanding that the postal ballot notice be recalled, which Spice refused by letter dated 06.02.2015. Thereafter on 18.02.2015, the petitioners represented to SEBI, claiming an investigation under Regulation 5 of the Regulations, into the proposed delisting of the equity shares of Spice from the BSE and NSE and to direct the latter respo .....

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uge financial loss to them as the current market price of the said shares is ₹ 28/- while they had, during the financial year 2009-2010, acquired 15,34,487 equity shares at a price ranging from ₹ 105/- to ₹ 140/- each. It is also alleged by the petitioners that two trusts namely Mahesh Prasad-Independent Non Promoter Trust and Mahesh Prasad-Independent Non Promoter (Spice Employee Benefit) Trust (hereinafter referred to as the trusts ), holding 15.49% and 5.22% of the issued an .....

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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 is limited liquidity in the scrip of the Company , as stated by the Spice) and thus the proposal of delisting is against the interest of shareholders. 4. Regulation 3(9) of the said regulations is reproduced below for ease of reference: Regulatio .....

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the High Court of Bombay in Pankaj Bhatt & Anr. Vs. Union of India & Ors.(WP(C) No. 2157 of 2014), which according to the petitioners is similar to the case in hand. In the above case, the petitioners were aggrieved by the order of the SEBI, which permitted the delisting of companies to be proceeded with even after prima facie finding that a particular company holding majority public shares was possibly under the control of the respondent company‟s promoter and that it was acting .....

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ters 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 in th .....

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shares which were held by Spice Televentures Private Limited, the transferor company, were transferred to the trusts pursuant to the scheme of amalgamation under Sections 391/394 of the Companies Act, 1956, duly approved by this court and the Allahabad High Court, whereby Spice Televentures Private limited merged with Spice, the fourth respondent. The said respondent further responded that the trusts were and would continue to remain independent bodies under the control of their respective trust .....

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e 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 .....

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recognised stock exchange, the annualised trading turnover in such shares during the preceding six calendar months prior to month in which the recognised stock exchanges were notified of the board meeting in which the delisting proposal was considered, is less than five percent (by number of equity shares) of the total listed equity shares of that class and the term frequently traded‟ shall be construed accordingly. (3)… 10. In these writ proceedings, this court cannot on the basis .....

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trusts to delist from the BSE and NSE. Under Regulation 3(9) of the SEBI (Share Based Employee Benefits) Regulations 2014, shares held by trusts such as the trusts in question would not form part of public shareholding under the minimum 25% rule 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 B .....

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