Business Standard

Sebi finds no violation by Satyam

Related News

Unlikely to launch formal probe into IT firm’s Maytas move.

The Securities and Exchange Board of India (Sebi) has, prima facie, not found any violation of norms relating to takeover and corporate governance in its preliminary surveillance of the deal involving the acquisition of Maytas Infra by Satyam Computer Services.

Thus, sources close to the development said, there was no need for a formal investigation. Instead, the market regulator would probe the deal under Sections 370 and 372 of the Companies Act. Therefore, the probe would be limited to the deal between the two listed entities — Satyam and Maytas Infra — and not cover the one involving Satyam and unlisted firm Maytas Properties.

Section 370 of the Companies Act deals with loans to companies under the same management. Under this Section, a company could not give loans or any form of guarantee to companies under the same management unless it has been approved by a special board resolution. Section 372 deals with purchase of shares of one company by another.

These purchases, sources said, are governed by certain restrictions imposed by the board of the company at the time of its inception and copies of this document are submitted to the market regulator and the Department of Company Affairs.

Sources said the probe is intended to find out if there has been any substantial purchase or sale of shares between the group companies over a two-to-three month period.

“Even if prima facie it seems that there has been no violation, one needs to check if the loans and investments made into the group companies are supported by any clause that the same could get converted into equity, or any other form of control, later,” said the source.

Further, the market regulator proposes to check if the companies had made the required disclosures to stock exchanges before such proposal was announced. Reportedly, institutional investors had strongly objected to the fact that the acquisition decision, which the company had conveyed to the Bombay Stock Exchange (BSE) after trading hours, was not communicated to shareholders first.

Last week, Satyam had announced its plan to acquire two companies - Maytas Infra (51 per cent) for around Rs 6,240 crore and Maytas Properties (100 per cent) for Rs 1,440 crore. However, a day after the announcement, the company reversed its decision amidst strong opposition from its shareholders.

Read more on:   
|
|

Read More

Sensex ends at 3-week low; sentiment still weak

The Sensex fell to a three-week low on Monday after disappointing quarterly earnings hit Bank of Baroda and IDFC, while investors continued to book ...

Quick Links

 

Market News

Markets have a choppy morning

The gains in the banking pack ahead of the Q4 numbers are being offseated by losses in RIL and the FMCG space.

Bourses await nod for longer trading hours

Brokers have asked for a longer session on poll result day and an additional one on May 17

Operational issues hit IPO applications from small towns

In a recent SME issue, about 20-25 investors from a tier-II centre were unable to participate

Potato prices spurt as bad weather threatens output

In Amritsar mandis, average price was Rs 1,000 a quintal on Tuesday from Rs 800 a quintal last Saturday

India may lose top rice exporter spot to Thailand

A drop in Indian exports could help Thailand trim a record inventory, chalked up under a controversial rice-buying scheme

Back to Top