| Roy's sons quit firm days before bond issue |
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NSUNDARESHA SUBRAMANIAN New Delhi, 10 March Sahara chief Subrata Roy's sons, Sushanto and Seemanto, resigned from the board of Sahara India Real Estate Corp Ltd ( SIRECL) days before the company issued its prospectus for the bonds that landed their father in jail. A Business Standard investigation of the red- herring prospectus filed by SIRECL with the registrar of companies for issue of optionally fully- convertible debentures ( OFCDs) reveals Sushanto Roy, the elder son, resigned from the company's board with effect from February 29, 2008. Seemanto Roy resigned 10 days later ( on March 10). Both cited personal reasons. Soodip Neogi, another SIRECL director, also resigned on March 10. The company's prospectus, filed on March 13 after its board passed a resolution on March 10 to issue OFCDs in "implementation of the resolution of the shareholders in the extraordinary general meeting" of March 3, was signed by three directors — Vandana Bhargava (spelt Bharrgava), Ravi Shankar Dubey and Ashok Roy Choudhary. While Dubey and Choudhary have been sent to Delhi's Tihar jail along with Subrata Roy by the Supreme Court, Bhargava, though free, has been directed to coordinate with others for an early repayment of the debenture money to the Securities and Exchange Board of India. Turn to Page 19 > Exited realty firm's board in February- March ' 08; red- herring prospectus was filed on March 13 File photo of Sahara group chief Subrata Roy ( centre) with sons Seemanto ( left) and Sushanto WHO'S IN, WHO'S OUT? |Jan 28, 2008: Vandana Bhargava and Ravi Shankar Dubey appointed as directors |Feb 29, 2008: Sushanto Roy resigns from board; Ashok Roy Choudhary joins |Mar 10, 2008: Seemanto Roy and Soodip Neogi quit as directors; board passes resolution to implement optionally fullyconvertible debenture ( OFCD) issue |Mar 13, 2008: Red- herring prospectus for OFCD issue signed by Bhargava, Dubey and Choudhary |Apr 25, 2008: Issue of OFCDs begins COMPANIES 2 > >Hearing deferred; Roy to remain in jail |
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| Roy's sons quit firm ... |
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Before becoming group IT head, Neogi was a member of Subrata Roy's core team and was mentored by the Sahara chief in various aspects of business —parabanking, aviation, media, real estate and infrastructure. The company raised ₹ 19,400 crore from over 22.1 million investors through the OFCDs. Regulators and courts have used the red- herring prospectus to establish the issue was not in accordance with the law. Under the head ' objects', the prospectus said: " The fund raised shall be utilised for the purpose of financing the acquisition of lands for development of townships, residential apartments, shopping complexes, etc." In other objects it listed infrastructure activities and power generation. "Money not required immediately by the company may be parked/ invested, inter alia, by way of circulating capital with partnership firms or joint ventures or in any other manner according to the decision of the board," the prospectus added. The cost of the projects mentioned was " around ₹ 20,000 crore." The current directors were relative newcomers to the SIRECL board when the issue was launched. Choudhary joined on February 29, 2008, while Dubey and Bhargava a month earlier on January 28. Subrata Roy himself is not a member of the SIRECL board, and the prospectus describes him as the company's promoter. "Sahara India Real Estate Corporation is a limited company promoted by Shri Subrata Roy Sahara. Shri Subrata Roy Sahara is founder of the Sahara India group," the prospectus says. |
| No violation in Jet deal, Etihad tells Sebi |
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Mumbai, 10 March Abu Dhabi's Etihad Airways has denied violating takeover rules while buying a 24 per cent stake in Naresh Goyal's Jet Airways. In a reply to the Securities and Exchange Board of India (Sebi), the foreign airline has said it is not liable to make an open offer for the public holding in Jet as there has been no violation of the takeover code. Etihad's main contention is the deal was cleared by both the securities market regulator and the Competition Commission of India before it was served a notice by Sebi in February. The airline had to reply to the notice within 21 days, failing which it could be asked to make an open offer. The Abu Dhabi- based airline, in its reply, is believed to have said the anti- trust watchdog-which observed that Etihad would get joint control in Jet Airways — had examined the deal purely from a competition law perspective and not through the prism of the Companies Act or the Sebi's takeover code. Sebi and Etihad did not respond to this newspaper's queries on the matter. Last December, Etihad and Jet Airways had appealed to the Competition Commission to review its observation but the plea was rejected. In a communication to the ministry of finance in September, Sebi stated the agreement between Jet Airways and Etihad did not result in change of control. However, the market regulator had put in a caveat that if any other regulator took the view that Etihad was gaining control over Jet Airways, the two airlines would be deemed to be "persons acting in concert". Sebi's notice might have been influenced by the Competition Commission's observation on the deal. According to the takeover code, an open offer can be triggered if an entity acquires "control" over a listed company. Jay Parikh, partner in Verus, a law firm, said, " The Competition Commission's observation on ' control' does act as a catalyst for Sebi to review the implications of the Jet- Etihad deal under the takeover regulations. At the heart of the debate lies the issue of what should constitute 'control' from the perspective of securities law." "Control is a subjective issue. A fresh view has come Sebis way. The regulator will definitely act on this," said Pavan Kumar Vijay, managing director &founder, Corporate Professionals, aconsultancy firm. DEAL DETAILS 2013 | Apr 24: The board of Jet Airways approves 24% stake stale to Etihad at ₹ 754.7 a share |Sep 25: Sebi writes to DEA stating the revised deal doesn't result in change of control and the two entities won't be treated as PACs. If any other regulatory agency sees Etihad is acquiring control over Jet, Sebi will consider the entities as PACs |Nov 12: CCI approves the Jet- Etihad deal, says it doesn't raise concerns of adverse competition issues |Nov 26: CCI also says Etihad gains ' joint control' through the deal 2014 | Feb: Sebi issues show cause notice to Etihad for code regulations |Mar: Etihad in its reply to Sebi denies violation of takeover code. Says CCI has made an observation purely from a competition law perspective Abu Dhabi- based airline says CCI's view on control different from that under takeover code |
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