Greetings !
The Securities and Exchange Board of India (SEBI) released a discussion paper on Tuesday dated December 30, 2014 proposing new rules to allow re-classification of promoters as public shareholders.
SEBI has earlier disallowed re-classification of promoter as public shareholder in various instances.
Per discussion paper, reclassification would be permitted in three scenarios and for each of that, specific conditions would need to be met.
Public comments are invited by SEBI on the discussion paper to be submitted by January 16, 2015.
PFA
Attached Precursor provides analyzed update of the discussion paper with cases in past where SEBI has taken views on reclassification on Promoter as Public.
PFA
Disclosure of "otherwise encumbered" shares by Promoter / Promoter Group in Clause 35, unjustified - SAT Hi,
Greetings !
Greetings !
- Background of the case (Golden Tobacco Ltd & GHCL Ltd v. SEBI) :
- In this case, SEBI alleged that the company failed to comply the disclosure norms under clause 35 of the listing agreement to disclose to the stock exchange that by an arbitration order dated July 23, 2009, nine promoter entities of the company were restrained from selling transferring or creating third party interest in any manner in the shares of the company held by such promoters. Clause 35 requires the company to disclose to the stock exchange the details of "shares pledged or otherwise encumbered".
- SEBI's adjudicating officer imposed penalties under section 23E of the Securities Contracts (Regulation) Act, 1956 and section 15HA of the Securities and Exchange Board of India Act, 1992 of Rs. 1 crore on the Company.
- Company preferred an appeal to SAT against the aforesaid order.
- Issue under question :
- Whether a listed company is required to disclose to the Stock Exchange, details of 'otherwise encumbered' shares of that listed company held by the promoter/promoter group, even though there is no obligation cast upon the promoter/promoter group to make such disclosures to the listed company?
- SAT Order :
- SAT set aside the penalty order of Rs. 1 crore issued by the SEBI alleging violation of Clause 35 disclosure norms.
- According to SAT, obligation on Company to disclose to the Stock Exchanges details of shares which are otherwise encumbered by the promoter / promoter group was unjustified as there was no such obligation on the promoter / promoter group to intimate such details to the company.
- In order dated September 28, 2011 of Dewan Housing Finance Corporation Ltd. case, Adjudicating Officer of SEBI had already construed the words 'shares pledged or otherwise encumbered' to cover details of pledged shares only. Thus, it was unjustified on the part of the Assessing Officer to take a contrary view in case of Golden Tobacco Limited without assigning reasons thereto.
- Our Comments:
- Although, there are no directions issued to revise the format of the Clause 35, SAT has taken a clear position to condemn the unjustified requirement to disclose "otherwise encumbered" shares of promoter / promoter group.
- This position comforts the listed companies and shall be welcomed by the industry.
- Also, the order would act as a deterrent to any further inconsistencies in the approach of SEBI for similar cases.
__._,_.___
No comments:
Post a Comment