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TMI Blog2019 (4) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... r Corporation Ltd. (hereinafter referred to as 'IPCL') is an unlisted Company and is the sole promoter entity of DPSC holding 93% of the shareholding in DPSC. 3. The Securities Contracts (Regulation) Act, 1956 (SCRA) was enacted to prevent undesirable transactions in securities by regulating the business of dealings therein, and by providing for certain other matters connected therewith. Further, for carrying out the mandate of the SCRA, the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as 'SCRR') were framed by the Central Government. Section 21 of the SCRA mandates the compliance, by all listed companies, of the conditions of the listing agreement with the stock exchange. The SCRR inter-alia prescribes the requirements which are required to be satisfied by the companies for the purpose of getting their securities listed on any stock exchange in India. 4. The SCRR was amended vide notification of the Securities Contracts (Regulation) (Amendment) Rules, 2010 ('First amendment') by the Central Government dated June 04, 2010 and amended again vide Securities Contracts (Regulation) (Second Amendment) Rules, 2010 ('Second amendment') in terms whereof Rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent, within a period of three years from the date of such commencement, in the manner specified by the Securities and Exchange Board of India. Explanation: For the purposes of this sub-rule, a company whose securities has been listed pursuant to an offer and allotment made to public in terms of sub-clause (ii) of clause (b) of sub-rule (2) of rule 19, shall maintain minimum twenty five per cent, public shareholding from the date on which the public shareholding in the company reaches the level of twenty five percent in terms of said sub-clause. (2) Where the public shareholding in a listed company falls below twenty five per cent. at any time, such company shall bring the public shareholding to twenty five per cent within a maximum period of twelve months from the date of such fall in the manner specified by the Securities and Exchange Board of India. (3) Notwithstanding anything contained in this rule, every listed public sector company shall maintain public shareholding of at least ten per cent.: Provided that a listed public sector company- (a) which has public shareholding below ten per cent, on the date of commencement of the Securities Contracts (Regulation) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be transferred to the Trust; (c) After that, IPCL would be amalgamated into DPSC which would take over its business. IPCL would cease to exist and the balance shareholding of IPCL in DPSC would get cancelled; (d) DPSC would issue 112,02,75,823 new shares to the shareholders of the IPCL, after which the holding of the said Trust would be only 24.69%; (e) After the said amalgamation was complete, the said Trust would be holding 24.69%, which would be classified as a public shareholding." The said Scheme was considered and sanctioned by the Calcutta High Court by an order dated 17th April, 2013 passed in Company Petition No.206 of 2012. 9. It transpires that SEBI issued a letter dated 15th April, 2013 asking information from the Company pertaining to compliance with the MPS requirement by the Company in terms of Rule 19(2) (b) and Rule 19A of the SCRR Rules. In response to the said letter, the Company replied vide their letter dated 3rd May, 2013 intimating them that the Scheme of Arrangement and Amalgamation has been sanctioned by the Calcutta High Court by an order dated 17th April, 2013 and pursuant to the said Scheme 38,95,15,856 shares held by the sole promoter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch newspapers as may be suggested by SEBI within a week of the form of the advertisement being forwarded to the office of SEBI in Kolkata. Such form of the advertisement should be forwarded to the relevant office within three weeks from date. The directions herein are in modification of the interim order of February 20, 2015 that restrains the amalgamated company from dealing with its shares." 12. In compliance of the order of the Calcutta High Court, the Trust issued an advertisement on 6th April, 2017 for sale of 32,63,16,563 shares. Subsequently, the Trust issued another advertisement on 26th April, 2017 for sale of its shares. Through this advertisement only 7,73,051 shares were subscribed. Since the time period was elapsing as per the order of the Calcutta High Court and the shares were not being subscribed by the public the Trust moved an application before the Calcutta High Court for extension of time. The Calcutta High Court by an order dated 25th August, 2017 granted time till end of February, 2018 to sell its shares. Pursuant to the said direction the Trust issued an advertisement dated 21st December, 2017 and again on 30th January, 2018 and again on 15th February, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MPS requirements would be achieved. The Scheme was initially sanctioned but was subsequently modified on the intervention of SEBI by the Calcutta High Court. It was found that the transfer of shares by IPCL to the Trust was not sufficient compliance of the MPS requirement under Rule 19 and 19A of the SCRR Rules. The Calcutta High Court accordingly directed that in order to achieve the 25% minimum public shareholding in the amalgamated Company 32,63,16,563 shares were required to be sold by the Trust to the public through a public offer. We find from a perusal of the orders of the Calcutta High Court that a specific direction was issued to the Trust to divest its shares by making a public offer. No direction whatsoever was given to the Company or its Directors. 15. The contention of the respondent that if the MPS requirement was not achieved through this public offer pursuant to the direction of the Calcutta High Court it was still open to the Company and its Directors to ensure compliance of the requirement of law by adopting any of the methods as prescribed by SEBI vide its circulars cannot be accepted as it would run counter to the Scheme of Arrangement and Amalgamation as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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