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TMinority shareholders of Uttam Galva Steels have moved the Securities Appellate Tribunal (SAT) against the stock exchanges’ nod for declassification of ArcelorMittal as a promoter of Uttam Galva.
Both the BSE and the National Stock Exchange (NSE) had approved the declassification last week.
Counsel representing the shareholders submitted that the reclassification was in violation of Listing Regulations. An informal guidance from Sebi had not been sought, and the reclassification was not approved by the shareholders in a general meeting, it was alleged.
However, SAT refused any immediate stay on the promoter declassification nod. According to the order, the transfer of shares from Arcelor to Sainath being an inter-se transfer between promoters, it appeared, prima facie, that an approval from the shareholders, as contemplated under Regulation 31A(5), would not apply to the present case.
It further said the fact that the two stock exchanges, without waiting for the informal guidance from Sebi, had approved the reclassification separately, and not jointly, could not be a ground to stay the impugned decisions of the NSE and the BSE, pending disposal of the appeal on merits. The tribunal will hear the matter on April 23.
A stay on declassification could have put ArcelorMittal’s rebid for Essar Steel in trouble. The date for rebid is April 2. In the first round, both Numetal and ArcelorMittal were found to be ineligible. Though legal advisors to ArcelorMittal were divided on the reasons for ArcelorMittal’s ineligibility, one view was that it was not eligible as it was not declassified from the stock exchanges as a promoter of Uttam Galva.
On February 7, ahead of the Essar Steel bid, ArcelorMittal transferred its entire stake in Uttam Galva Steels by way of an inter-se transfer. However, the change in promoter status had not reflected in the records of the stock exchanges. ArcelorMittal approached the stock exchanges in the early part of March for declassification.
The world’s largest steel maker, however, came down heavily in the wake of minority shareholders moving SAT.
In a statement, the company said, “This is another obvious action to delay and complicate the process to find a new owner for Essar Steel India. Quite clearly, ArcelorMittal is not a promoter of Uttam Galva. We never considered ourselves a promoter as we had no management involvement or board representation and furthermore sold our shareholding. It is only natural, therefore, we should be declassified on the stock exchanges which has been done following the relevant processes.”
“We note the latest attempt to delay the process has not succeeded with bids to be submitted in April 2. ArcelorMittal plans to submit a bid as part of the revised offer process although we continue to believe our original offer is eligible. Our track record and long experience in the steel industry make us a highly credible bidder for Essar Steel India to be able to add value to the growth and development to the Indian steel industry,” it further said.
A source close to the company said the legal cost of the proceedings would far outweigh the value of the investment. The minority shareholders were understood to represent 0.04 per cent of Uttam Galva’s shares.