Sebi Spikes Acc Investors & #39; Plea: Acc

The Securities and Exchange Board of India (Sebi) has dismissed an issue raised by some investors of ACC that Gujarat Ambuja Cements (GACL) had taken control of ACC in violation of the takeover regulations and without making a public offer to shareholders of the target company.

The regulator has taken the stand that though no violation of the regulations has occurred under the takeover code, the issue can draw application of laws such as the Monopolies and Restrictive Trade Practices Act or even the Companies Act.

Ashwin K Doshi and others had filed a writ petition against the Sebi, ACC and nine others in the Bombay High Court on the grounds that GACL and ACIL (collective called Ambujas) had taken over the control of ACC without making a public offer to the shareholders of the target company under the Sebi (substantial acquisition of shares and takeovers) Regulations, 1997.

The petition was dismissed on September 13, 2000, and the court directed the complainant to move Sebi for relief.

Thereafter, a review petition was filed, but the court on 16th October, 2000, dismissed the writ directing the complainant to press their points before the markets regulator in a proper proceeding. The complainants then approached the regulator and a hearing was given to all the parties concerned.

It was alleged that the Ambujas had acquired shares exceeding 15 per cent if the shares, which are held by a notified person and alleged to have been attached by the special court, are excluded from the total voting capital of ACC.

On considering the facts of the case and the submissions made by the various parties, the Sebi on Thursday, 19th July, 2001, observed, that shares which carry voting rights do not cease to be so merely because the same have been suspended or attached. Accordingly, the shares are, therefore, to be included for determining the total voting capital of the target company. Thus, the Sebi said, the Ambujas had acquired 14.45 per cent of the share capital or voting capital of ACC which is below the threshold limit of 15 per cent as specified under Regulation 10 of the takeover code.

Sebi also ruled that it could not be said that the Tatas exercised any control in the target company though they have been described as promoters of ACC. Further, it cannot be said that the appointment of two or four directors of the Ambujas on the ACC board itself leads to acquisition of control by them. According to Sebi, the Ambujas do not hold controlling shares in the target company and there is no evidence to show management control of the target company and hence, Regulation 12, is not applicable to this case.

Sebi has, however, stated that if as a result of further developments which enable the Ambujas to exercise directly or indirectly control over the target company, the matter may have to be examined afresh at that stage.