Sebi at odds with R- Power over energy arm merger
SAMIE MODAK
Mumbai, 11 October
Reliance Power is at odds with the Securities and Exchange Board of
India ( Sebi) over the restructuring process involving its fully-
owned subsidiary, Reliance Clean Power.
The Anil Ambani- led company is of the view that it doesn't need the
market regulator's permission to merge its unlisted arm with itself.
Sebi has opposed the view, stating the scheme would have be vetted
before it can go through.
Sebi, through circulars in February and May, had directed all listed
companies to seek its approval while undertaking any scheme of
arrangement.
The power generation firm's board had in July approved the scheme of
amalgamation of Reliance Clean Power, its stepdown subsidiary company,
with Reliance Power, listed on the BSE and the NSE.
Reliance Power said as the scheme was filed by its unlisted arm, it
need not go to Sebi. But the market regulator maintained that the
circular would be applicable as one of the companies involved was
listed.
While getting the scheme approved from the Bombay High Court, Reliance
Power had said it wouldn't seek Sebi's nod as the scheme involved just
the transfer of a wholly- owned subsidiary and not issuance of shares.
"Reliance Power did not file the application with the court, in
deference to the settled position under the law and also under the
bona fide belief that it does not require approval from the stock
exchanges under clause 24( f) of the listing agreement, inasmuch as
the scheme does not involve any issue of further shares and the
amalgamation is with the wholly owned subsidiary company," acompany
spokesperson said in a statement.
As the matter concerned Sebi, the court directed the securities market
regulator to file its reply. Sebi replied its circular would be
binding on Reliance Power and it should obtain its approval.
Turn to page 14 >
MARKETS 6 >
>SAT asks whether Sebi can reconsider RIL consent plea
Anil Ambani group firm says it doesn't need regulator's nod due to
absence of share issue
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Click here to read more...Turn to page 14 >
Click: Article continued from…Sebi at odds with
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Sebi at odds with RPower over energy arm merger
The court is likely to take a decision next week on whether the
circular would apply to Reliance Power.
Earlier, listed companies had to only obtain no- objection
certificates from exchanges and get the approval of a high court.
However, due to growing concerns that certain companies were putting
minority shareholders in disadvantageous situations by carrying out
schemes of arrangement without proper disclosures or at inappropriate
valuations, the market regulator changed the rules to give itself a
say in the process.
Under the new norms, the market regulator issues observation on all
schemes of arrangement undertaken by listed companies.
>FROM PAGE 1
Sebi's draft Reits norms to benefit realtors with large leased assets
RAGHAVENDRA KAMATH
Mumbai, 11 October
The Securities and Exchange Board of India's ( Sebi) draft regulations
on real estate investment trusts ( Reits) could benefit listed firms
such as DLF, Prestige Estates and Phoenix Mills as well as unlisted
ones such as K Raheja Corp and Embassy group, which have large
rentgenerating assets.
According to analysts, these realtors would get a new avenue to cash
out their assets by floating Reits and listing on the stock exchanges.
India has 400 million sq ft of office and mall properties valued at $
60 billion (₹ 3.72 lakh crore), according to Morgan Stanley.
"Earlier, developers could either go for private equity funding,
strata sales or rental discounting. Now they can float their own Reits
and float them on exchanges," said Ambar Maheshwari, managing
director, corporate finance at Jones Lang LaSalle.
Reit is an investment vehicle that invests in real estate assets to
generate income. Reit can be listed and traded on the stock exchange
as well.
Sebi's announcement on draft Reit guidelines propped up BSE Realty by
2.66 per cent on Friday, while Sensex rose 1.26 per cent.
DLF has 28 million sq ft of rental space, Morgan Stanley analysts
Sameer Baisiwala and Harshal Pandya said in a report on Friday. "
Given DLF's high leverage and limited success in monetising its non-
core assets, REITs could provide new avenues to raise funding to help
it reduce debt. However, this might take a few months to acouple of
years to play out." Rajeev Talwar, executive director, DLF said: " It
will make real estate sector more transparent and market- oriented,
besides opening new equity route for developers." On whether the
company would float a Reit, he added: "It is part of our corporate
strategy, which has to be decided when things become clear." Mumbai-
based Phoenix Mills has over eight million sq ft of mall properties.
Anlaysts said Phoenix, too, could look at Reit because it has a large
portfolio of leased assets.
Samantak Das, chief economist and director ( research) at Knight Frank
India, said Reits will give financing and exit options to developers
and avenues for investors. " The timing of this move is also very
important, keeping in mind the prevailing paucity of funds coupled
with the ongoing slowdown in the economic growth." According to S
Srinivasan, CEO of Kotak Realty Fund, now that Sebi has delivered on
its part, it is up to the government to focus on the tax regime and
get it done to really kick- start the market.
"A Reit pays tax on rents and they pay tax while distributing profits.
This leads to double taxation. Reits are tax- free structures the
world over. This issue needs to be addressed," said Adidev
Chattopadhyay, an analyst with HDFC Securities.
Chattopadhyay added that levies such as stamp duty add to transaction
costs, which reduce the valuation of Reits.
DLF, Prestige Estates and Phoenix Mills among those who will benefit;
$ 60 billion of commercial assets could become Reits, says Morgan
Stanley
Real estate investment trusts (Reit) is an investment vehicle that
invests in real estate assets to generate income. Reit can be listed
and traded on the stock exchange as well
RBI to launch new RTGS system on Oct 19
BS REPORTER
Mumbai, 11 October
The Reserve Bank of India ( RBI) is set to introduce the revamped
real- time gross settlement ( RTGS) system on October 19 to facilitate
online real- time settlements of payments.
The RTGS system would process transactions such as inter-
institutional/ interbank transactions — the transfer of funds between
two members/ participants — RBI said in a statement. It would also
deal with customer transactions — funds transfer/ receipt on behalf of
the customer of an RTGS participant member.
Government transactions — transfer/ receipt of funds on behalf of
government accounts by a participating member —would also be carried
out. Broadly, four types of participants use the RTGS system— the
central bank, regular participants such as banks, restricted
participants such as primary dealers and clearing houses.
SAT asks whether Sebi can reconsider RIL consent plea
BS REPORTER
Mumbai, 11 October
The Securities Appellate Tribunal ( SAT) has asked whether the
Securities and Exchange Board of India ( Sebi) can reconsider a
Reliance Industries Limited (RIL) consent application relating to an
insider trading charge dating back to 2007.
A consent application allows the settlement of charges by paying a
monetary penalty without admitting or denying guilt. RIL had filed for
consent in relation to allegations of insider trading involving
erstwhile subsidiary Reliance Petroleum.
The company had moved SAT, challenging the rejection of its consent
application by a Sebi advisory committee. The company had said the
regulator had failed to provide it certain documents related to the
charges. Sebi had, however, denied these allegations, with its lawyers
saying thousands of pages of documents had already been made available
to the company.
The issue was resolved on Friday, after which the tribunal asked
whether Sebi would like to reconsider the application. Earlier, Sebi
had maintained whether or not it chose to grant consent to an
applicant was up to the regulator.
The matter had previously been heard on September 25. At that time,
the tribunal had rejected an intervening petition filed by M Furquan,
editor of Urdu daily Sach Bilkul Sach. Furquan wished to be part of
the petition on grounds of public interest.
The next hearing on the matter is scheduled for October 29.
In May, Sebi had imposed a penalty of ₹ 11 crore against RIL
subsidiary Reliance Petroinvestments on charges of insider trading, in
a separate case. On Friday, the RIL stock closed 0.37 per cent higher
at ₹ 863, against the Sensexs 1.26 per cent rise.
--
CS A Rengarajan
9381011200
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