WTM/GM/EFD/DRAIII/06/JAN/2017. Case: In Re: Acme Consultants Private Limited and Ors. Vs. Securities and Exchange Board of India

Case NumberWTM/GM/EFD/DRAIII/06/JAN/2017
JudgesG. Mahalingam, Whole Time Member
IssueSecurities And Exchange Board Of India Act, 1992 - Sections 11, 11B
Judgement DateJanuary 10, 2017
CourtSecurities and Exchange Board of India


G. Mahalingam, Whole Time Member

  1. Juggilal Kamlapat Jute Mills Company Limited (hereinafter referred to as "Target Company" or "JK Jute") is a company registered under the Companies Act, 1956 having its registered office at 84/49, Zarib Chowki, Kalpi Road, Kanpur - 208012 and its securities were listed on U.P. Stock Exchange Ltd. ('UPSE').

  2. On July 18, 2007, Rainey Park Suppliers Private Limited (Rainey), Mooldhan Advisory Systems Private Limited (Mooldhan), Watermark Systems Private Limited (Watermark) and Kanishk Translink Private Limited (Kanishk) had together acquired and were holding 14.78% of the shares/voting rights in JK Jute. On July 24, 2007, Rainey entered into a Share Purchase Agreement (SPA) to acquire 43,89,690 shares, constituting 78.12% of the total shareholding/voting rights of J K Jute, from the then promoters of JK Jute, namely, the Singhania group. This acquisition under SPA triggered obligation to make an open offer under the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (herein after referred to as "Takeover Regulations"). Therefore, Rainey along with other Persons Acting in Concert (PACs), namely, Mooldhan, Watermark and Kanishk made a Public Announcement on July 30, 2007 to make an open offer to other shareholders of the Target Company to acquire balance 7.10% shares. In the open offer document Rainey, the acquirer, had shown Mooldhan, Watermark and Kanishk as PACs. Pursuant to the open offer, the total holding of Rainey became 86.23%, whereas the shareholding of Mooldhan, Watermark and Kanishk remained as it was before the open offer. The balance 3.54% shares remained with the public. The details of the pre-open-offer and post-open-offer shareholding/voting rights of the acquirers and PACs in JK Jute are mentioned below.

  3. The aforesaid open offer closed on February 19, 2008. Subsequently, on March 19, 2009 Rainey transferred a total of 45,44,850 shares/voting rights to Acme Consultants Private Limited (Acme), Namokar Vinimay Private Limited (Namokar) and Mooldhan. These acquirers are hereinafter collectively referred to as "Noticees" and individually by their respective names. The details of the acquisition of shares by the Noticees in JK Jute and their post-acquisition shareholdings are as under:

  4. The Noticees did not make any disclosure under regulations 7(1) of the Takeover Regulations regarding the acquisition of shares in JK Jute on March 19, 2009. Subsequently, SEBI received a complaint dated July 18, 2011 alleging violation of SEBI Regulations because of the aforesaid acquisition of shares of JK Jute by the Noticees and seeking an investigation into the matter. Preliminary examination by SEBI revealed that the acquisition by the Noticees has triggered regulation 10 of the Takeover Regulations. Therefore, SEBI vide letters dated August 26, 2014 and March 23, 2015 sought certain information and details regarding their aforesaid acquisition from the Noticees. The Noticees responded vide letters dated February 28, 2015 and September 7, 2015.

  5. On an analysis of the information provided by Acme, Namokar and Mooldhan, it was observed by SEBI that Acme, Namokar and Mooldhan have common directors and Rainey had a different set of directors. Further, out of the three Noticees/acquirers, only Mooldhan was holding shares in JK Jute before and during the open offer made in 2008 (refer Table in para 2) as it was shown as PAC with Rainey, the acquirer, in the public announcement dated July 30, 2007. It was also noticed that the transfer of shares between Rainey and Noticees on March 19, 2009 took place within 3 years from the date of closure of open offer. Further, UPSE informed that the Noticees/acquirers have not made disclosures under...

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