Jaipur bourse suspends trading in BoR
The Jaipur Stock Exchange (JSE) suspended on Wednesday trading in shares of Bank of Rajasthan (BoR), with immediate effect, for providing misleading information and non-disclosure of material facts regarding its merger with ICICI Bank.
“The information and announcements made to Jaipur Stock Exchange by the Bank of Rajasthan Ltd in compliance with listing agreement were misleading and mis-stated, and non-disclosure of material facts in regard to the amalgamation/merger scheme,” JSE said.
According to JSE’s suspension order, BoR had violated various provisions of the listing agreement, Securities Contract (Regulation) Act 1956, Securities Contract (Regulation) Rules, 1957 and other applicable acts. JSE has listed violations of various provisions of the listing agreement in its show cause notice to BoR.
When contacted, a spokesperson for ICICI Bank said there would be no implication of the suspension of trading of BoR shares on JSE on the merger of BoR with ICICI Bank.
“The merger was already effective as of close of business hours on August 12,” the spokesperson said, referring the Reserve Bank of India's (RBI) approval of the merger on that date.
JSE's suspension order follows a show cause notice issued to the company on August 14 and a personal hearing on Wednesday before a committee constituted by the governing board of the exchange. According to JSE’s notice, in view of the cancellation of an extraordinary general meeting (EGM) by BoR on June 21, as such without getting any authority by a general body meeting, there was no resolution authorising the board of the bank to do any act and submit requisite application for sanction of merger with ICICI Bank to RBI.
Further, the scheme of amalgamation was not approved by the shareholders of BoR in accordance with Sub Section 4 of Section 44A of Bank Regulation Act, 1949, JSE said.
“In the circumstances, how the board of the bank could proceed further in the merger process and submit application for sanction to RBI?” JSE questioned in its show cause notice to BoR. “It appears that the entire board of the bank was not acting independently in the interest of all shareholders and they were acting in concert with only one group of shareholders, causing huge loss to other shareholders and investors in general.” JSE will inform the Securities and Exchange Board of India (Sebi) and RBI about its suspension order.
The ICICI Bank spokesperson stressed that: “There is no implication of the suspension vis-a-vis the shareholders of BoR, since trading until the Record Date (of August 25) continues unaffected on NSE and BSE.”