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2015 (11) TMI 29 - SECURITIES APPELLATE TRIBUNAL MUMBAI

2015 (11) TMI 29 - SECURITIES APPELLATE TRIBUNAL MUMBAI - TMI - Penalty imposed under Section 15H(ii) of SEBI Act, 1992 Public Offer and Open Offer under Regulations 10 and 12 of Takeover Regulation 1997 Delay of 89 days Appellant contends that Regulation 24(1) requires merchant banker to ensure arrangements for funds before public announcement and finances were organised within 85 days thus open offer was rightly made on 89th day Held That:- Very purpose of public offer would be frustra .....

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prescribed in Regulations 14(1) would not amount to sufficient compliance of Takeover Regulations Decided in favour of Revenue. - Appeal No. 319 of 2014 - Dated:- 20-7-2015 - J.P. Devadhar and Jog Singh, JJ. For The Appellant : Mr. Khamir Kamdar, Advocate i/b P.H. Bathiya & Associates For The Respondnet ; Mr. Kumar Desai, Advocate with Mr. Rushin Kapadia, Advocate i/b K Ashar & Co. Per : Jog Singh (Oral) 1. The present appeal is preferred by the appellant against the impugned order da .....

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SPA s ) each dated March 31, 2008 thereby acquiring 40,47,538 shares (24,000 fully paid-up shares and 16,47,538 partly paid-up shares) of M/s. Premier Energy and Infrastructure Limited (for short Premier ), which triggered the requirement of making public offer as per the Takeover Regulations, 1997. The appellant was, in fact, required to make an open offer under Regulations 10 and 12 and other connected regulations of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 .....

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ut the same could not be made on time due to reasons beyond its control. 4. Learned counsel for the appellant, Mr. Khamir Kamdar, vehemently argued that although Regulation 14(1) prescribes four days limitations for making public announcement yet Regulation 24(1) requires the merchant banker to ensure that the arrangements for funds and money before the public announcement could be made. Such finances could only be organized by the acquirer within 85 days of the two SPA s, thus, the open offer w .....

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ed the case put forth by the appellant. 6. We have heard learned counsel for the parties at length and perused the appeal as well as concerned Regulations. We are of the considered opinion that the very purpose of public offer envisaged under the Takeover Regulations, 1997 would be frustrated if the acquirers are given opportunity to make public announcement after a long lapse of time from the date of acquisition i.e. the date of SPA s are signed by the parties to acquire shares beyond 15% and/o .....

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at the very inception when the SPA s were entered into by the appellant. Therefore, the violation of such a valuable statutory right of shareholders to exit and/or to continue with the company cannot be compensated by paying meager interest by the acquirer. The time limit of 4 days prescribed in Regulation 14(1) is crucial and important as time is of the essence in such acquisitions and consequent open offer. The value of time limit prescribed in Regulation 14(1) cannot be undermined by reading .....

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ert with him), entitle such acquirer to exercise [fifteen] per cent of more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the regulations. Acquisition of control over a company. 12. Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares .....

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14. (1) The public announcement referred to in regulation 10 or regulation 11 shall be made by the merchant banker not later than four working days of entering into an agreement for acquisition of shares or voting rights or deciding to a acquire shares or voting rights exceeding the respective percentage specified therein: Provided that in case of disinvestment of a Public Sector Undertaking, the public announcement shall be made by the merchant banker not later than 4 working days of the acqui .....

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is able to implement the offer; (b) the provision relating to escrow account referred to in regulation 28 has been made; (c) firm arrangements for funds and money for payment through verifiable means to fulfil the obligations under the offer are in place; (d) the public announcement of offer is made in terms of the regulations; (e) his shareholding, if any in the target company is disclosed in the public announcement and the letter of offer. SEBI Act, 1992: 15H. Penalty for non-disclosure of acq .....

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