The voting rights of Vaibhav Pharma Ltd. (VPL) which is one of the promoter company of Poorvi Adhesive Ltd. (PAL) has increased beyond 75% of the total paid-up capital of the company due to the buy-back of shares by PAL
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · December 2015
The voting rights of Vaibhav Pharma Ltd. (VPL) which is one of the promoter company of Poorvi Adhesive Ltd. (PAL) has increased beyond 75% of the total paid-up capital of the company due to the buy-back of shares by PAL pursuant to section 68. The Securities and Exchange Board of India issued a show cause notice to VPL alleging that they had to make a public announcement to acquire shares from the shareholders of the company and by not doing so they have violated provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Keeping in view the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, give your comments.
Answer & Explanation:
As per Regulation 10, An increase in voting rights in a target company of any shareholder beyond the limit attracting an obligation to make an open offer under sub-regulation (1) of regulation 3, pursuant to buy-back of shares shall be exempt from the obligation to make an open offer provided such shareholder reduces his shareholding such that his voting rights fall to below the threshold referred to in sub-regulation (1) of regulation 3 within ninety days from the date on which the voting rights so increase. In case of Hari Dalmia Vs. SEBI, SAT has decided that if percentage increase in voting rights was not by reason of any act of appellant but was incidental .ie buy-back of shares, such passive increase would not attract open offer obligations, Hence in the given case Vaibhav Pharma Ltd., is not obligated to comply with the requirements of open offer.
Topics: Corporate Restructuring
Related Questions in this Topic
- Is it possible to restructure debts through reduction of capital? Support your answer with a decided case law.
- Indicate briefly the tax concessions available to a demerged company in terms of Income Tax, 1961.
- "While according approval to the scheme of amalgamation of two banking companies, Board of Directors need to give carefu...
- "Corporate restructuring strategies depend on the nature of business, type of diversification required with the object o...
- The approval of Tribunal is required for any scheme of reconstruction. The Tribunal considers minority interest while ap...