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(i) There was a joint management of two groups namely Kishor H. Patel and others and the Acquirers as on passing a special resolution in the EGM held on 08.02.1999.
(ii) Change from Joint control to sole control does not constitute a change in the control of management as approved by special resolution passed in the EGM held on 08.02.1999.
(iii) The value of shares proposed to be transferred had been decided as per the provisions contained in regulation 20 of the said Regulations.
(iv) Since the procedures laid down under proviso to explanation 1 of regulation 12 has been followed we were given to under stand that there was no need for going through the mode of public offer as specified under regulation 14.

Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a resolution passed by the shareholders in a general meeting".

Explanation - (i) For the purposes of this regulation where there are two or more persons in control over the Target company, the cessor of any one such person from such control shall not be deemed to be a change in control of management nor shall any change in the nature and quantum of control amongst them constitute change in control of management :

(ii)Where any person or persons are given joint control, such control shall not be deemed to be a change in control so long as the control given is equal to or less than the control exercised by person(s) presently having control over the company.

The Acquirers have claimed that they were inducted in the joint management of the Target Company as per the SEBI regulations. As per the explanation (ii) to the regulation 12, where any person or persons are given joint control, such control shall not be deemed to be a change in control so long as the control given is equal to or less than the control exercised by the person(s) presently having control over the company. In the instant case it is observed that at the time of their appointment on the board, the Board of the Target company consisted of 5 directors (excluding GIIC nominee). The promoters, Kishore Patel and group held 39.02%. The Board was expanded and the Acquirers were appointed on the Board. Also, 9.98% shares were transferred to them. However, there is no document on record to prove that the said appointment/ transfer was to give joint control to the Acquirers and neither any disclosures in this regard were made to the shareholders of the Target company while seeking their approval for appointment of new directors.

Regulation 14(3) : "The public announcement referred to in Regulation 12 shall be made by the merchant banker not later than four working days after any such change or changes are decided to be made as would result in the acquisition of control over the Target company by the acquirer".

From the facts of the case it is clear that the MOU was admittedly entered into between the Acquirer and the promoters of the Target company on 3/10/97 wherein a clear intention of acquiring substantial shares/voting rights i.e. 39.02% shares and control over the Target company existed. In view of the said agreement the provisions of the said Regulations got triggered on 3/10/97 since in terms of regulations14(1) and 14(3) the public announcement has to be made by the Acquirer within 4 working days of entering into an agreement or taking any decision which would result in change in control of the Target company. Accordingly, once the said Regulations have been triggered the Acquirer is under an obligation, to make a public announcement in terms of the Regulations.