| Sebi notice to Etihad for code violation |
|
Mumbai, 14 February In a new twist to the Jet- Etihad saga, the Securities and Exchange Board of India ( Sebi) has served a notice on Etihad Airways for alleged violation of the takeover code regulations while acquiring 24 per cent stake in Jet Airways. Sources close to the development say the Abu Dhabi- based airline, in its reply, will have to address the issues raised by the market regulator, failing which it will have to make an offer to buy the entire 25 per cent public holding in Jet through an open offer. The notice was issued to Etihad earlier this week by Sebi, according to the sources. Etihad, Sebi and Jet Airways did not respond to an email query on the issue. According to Sebi's takeover code regulations, an open offer is triggered in multiple ways, including when an entity acquires 25 per cent stake in a listed firm and/ or if it acquires ' control' over it. In this case, Sebi could have initiated enforcement proceedings based on a view that the Abu Dhabi- based carrier was gaining control over the Indian carrier. "The deal initially went to Sebi, which had sanitised the contract agreements to ensure there was no control- related issue and based on that it had given the go- ahead. One has to see whether the assessment by the Competition Commission of India has made Sebi rethink or is it that they now see that the element of control still operates and, hence, they see an open offer trigger," says Ramesh Vaidyanathan, managing partner, Advaya Legal. Sebi's latest action will further complicate matters for both carriers, already battling lawsuits related to the deal. Also, the open offer, if successful, might clash with the foreign direct investment ( FDI) norms as well as Sebi's minimum public float requirement. FDI norms allow a foreign airline to hold up to 49 per cent stake in a domestic airline. Etihad has secured Foreign Investment Promotion Board ( FIPB) approval to purchase 24 per cent equity stake in Jet Airways. In case Sebi passes an order requiring Etihad to make an open offer, it will have to approach the FIPB again for acquiring additional shares. The additional shares acquired through the open offer will take the promoter holding in Jet Airways beyond 75 per cent, the maximum apromoter can hold in a listed firm. Currently, Jet, which has 51 per cent stake, together with Etihad owns 75 per cent in the company. Turn to Page 8 > Regulator believes Jet Airways deal triggers open offer JET SHAREHOLDING PATTERN As of Dec 2013 ( in %) Source: Capitaline Compiled by BS Research Bureau Others 1.05 Insurance firms 2.14 MFs/ UTI 2.29 Corporate bodies 4.78 FIIs 5.85 Retail 8.89 Promoter Naresh Goyal 51.00 24.00 Etihad Airway PJSC |
Click here to read more...Turn to Page 8 >
| Click: Article continued from…Sebi notice to Etihad for code violation |
| Etihad gets Sebi notice on violation of takeover code |
|
"If after an open offer, the promoters holding exceeds the 75 per cent limit, then they will again have to bring it below 75 per cent within ayear," says R S Loona, managing partner, Alliance Corporate Lawyers, a corporate law firm. Loona says the issuance of a showcause notice doesnt necessarily mean that Sebi will issue an adverse order. " If the noticee is able to explain why further Sebi action is not called for as the acquisition was within the rules, Sebi may not issue further directions," he says. Interestingly, Sebi, in a communication to the ministry of finance in September, had stated that the agreement between Jet and Etihad did not result in change of control and, hence, would not attract takeover code provisions. However, the market regulator had put a caveat stating that if any other regulator took the view that Etihad was acquiring control over Jet, the two entities would be deemed as persons acting in concert. Sebis latest action could possibly be guided by CCI observations on the deal, which had stated that the two entities were gaining joint control. |
| Centre mulls regulator for organised retail |
|
New Delhi, 14 February At a recent meeting, a committee of Union ministers discussed liberalising trade in the country, in sync with the Centres move to open the multi- brand retail segment. The meeting took up a proposal to set up a regulator for the organised retail trade and put in place adequate safeguards to protect the interest of small traders. No decision, however, was taken at the meeting. The panel will also consider bringing about changes in a host of legislation on internal trade, including the Shops and Establishment Acts and Essential Commodities Act, to facilitate the smooth movement of goods within India. The committee is headed by Consumer Affairs Minister KV Thomas and includes a host of ministers and officials from the departments of agriculture and finance, the Planning Commission and state governments. It is expected to present a report in the next six months. The committee was constituted as part of a 2012 Union Cabinet decision to allow 51 per cent foreign direct investment ( FDI) into multi- brand retailing. However, the decision was subject to approval by state governments. All governments ruled by the Congress favoured the decision. However, Rajasthan and Delhi, which saw changes in regimes recently, cancelled the decisions taken by their respective previous governments. The new governments of Delhi and Rajasthan had cited the issue of protection of small traders for the reversal of their decisions. Officials, however, said studies by various research agencies showed in any particular area, only 4.2 per cent of small and unorganised retailers were forced to shut their business after the advent of organised retail. Studies show retailing contributes 10- 12 per cent to Indias gross domestic product. A single proposal for FDI in multi- brand retail ( Tescos) has been recorded. Officials in the know said the finance ministry had proposed central legislation to regulate agriculture commodity markets in India, and this would also be considered by the committee at subsequent meetings. " A proposal to have a regulatory framework for e- commerce and online retailers such as Flipkart and eBay might also be considered in due course," the official said. He added though the Agricultural Produce Marketing Committee (APMC) Act was in place to regulate agricultural markets, it had led to cartelisation and price distortion by licensed commission agents. |Government proposal to put in place adequate safeguards to protect the interest of small traders |The number of small traders estimated to be 13 million in the country |Retail contributes 10- 12 per cent to Indias GDP WHAT'S IN STORE |
|
--
This mail and its attachments (if any) are confidential information intended for persons to whom the email is planned for delivery by the sender. If you have received this mail in error please notify the sender of the error by forwarding the email and its attachments (if any) and then deleting the mail received in error and the relevant email trail in this connection without making any copies or taking any prints.
__._,_.___
No comments:
Post a Comment