The Securities and Exchange Board of India has asked Religare Enterprises (REL) to seek statutory approvals necessary for an open offer by the Burman family by July 12. This comes after the Burman group alleged that the Religare board and its Chairperson Rashmi Saluja were blocking the open offer, while Saluja had complained that the Burman family was not ‘fit and proper’ for the acquisition.
REL and its Committee of Independent Directors had repeatedly brought to the attention of RBI, SEBI and IRDAI that the acquirers (Burman group) were not fit and proper to acquire control of REL, and their representations in this respect were currently pending before the relevant regulators. They had argued that, SEBI was left with no jurisdiction to give advice in relation to a matter that was already pending before the regulatory authorities.
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“The exercise of said right by the shareholders cannot be held hostage to the designs of the existing management of the target company, especially in such cases where the existing management is apparently hostile to the acquirers and faces a conflict of interest in facilitating the acquisition of shares /control by the acquirers in an open offer, due to a proposed change in control,” said SEBI.
The market regulator added that any action affecting the shareholders has to be taken with the consent of the shareholders. “It is noted that under Regulation 26 of the SAST Regulations, 2011, the Target Company has to constitute a Committee of Independent Directors, which then has to place reasoned recommendations on the open offer to shareholders. The said provisions imply that it is the shareholders who have to decide on tendering of shares in the open offer. The Target Company (REL) can only place the recommendation of the Committee of Independent Directors before the shareholders, but cannot take decisions on behalf of the shareholders,” SEBI order said
The markets regulator has directed the company to apply for approval to the Reserve Bank of India, Insurance Regulatory and Development Authority of India (IRDAI), and SEBI.
SEBI has also issued a show cause notice to Saluja and others from REL as to why directions restraining them from accessing the securities market, prohibiting them from buying, selling or otherwise dealing in securities in any manner whatsoever, directly or indirectly, for a specified period and further restraining them from being associating with any listed company and any registered intermediary, should not be issued against them, for the abovementioned alleged violations.