The Securities Appellate Tribunal has dismissed a plea filed by multinational firm Gillette India, which now have to sell shares public to comply with minimum 25 per cent public shareholding norms. Earlier, SEBI had also rejected the company’s proposal in this regard, as Gillette had planned to tweak the classification of one of its promoter as public.
3-stage plan
Passing the order on Wednesday, SAT presiding officer Jog Singh also vacated the interim relief given to the razor maker.
The case relates to an appeal filed by Gillette after the market regulator rejected its three-stage plan in which the promoter holding would have come down to 75 per cent even as less than 5 per cent shares would have been sold to the public.
Promoters currently hold 88.76 per cent of Gillette India, according to the latest data with the stock exchanges.
The tribunal, after hearing both the sides in the past, concluded that the manner in which Gillette had planned to achieve the 25 per cent requirement was “dubious” as it first entailed inter-se transfer of 4 per cent of its shares from its Indian promoter Poddar Group to its global promoter Procter and Gamble (P&G), which will have the effect of pushing up the shareholding of P&G from 75.9 per cent to 79.9 per cent.
According to the tribunal, the same would be “ex-facie in breach of law”.
Further Gillette had proposed to reclassify Poddar Group as a public shareholder instead of a promoter. The said proposal was questioned by the tribunal as a “contentious and circuitous method.”
Undue delay
The tribunal, which hears matters related to the market regulator, also wondered as to why Gillette could not follow a “straight forward approach of offering shares to the public as against such as dubious way.” It also observed that the company had sufficient time since SEBI had come out with the Securities Contract Regulatory Rules in June 2010 but still delayed the process.
When contacted on its next plan of action, a P&G Spokesperson said: “We are looking into the order in detail, and remain committed to complying with the new law and engaging with SEBI to achieve compliance with the minimum 25 per cent public shareholding requirement norm.”
priyanka.pani@thehindu.co.in