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Gillette India will have to comply with minimum 25% public shareholding norms, as the Securities Appellate Tribunal (SAT) today rejected an appeal by the company against a Sebi's decision in this regard.
Upholding Sebi's decision to reject a plan that involved an earlier promoter entity of Gillette India being re-classified as a public shareholder, SAT also vacated an interim stay given to the company on May 30.
"The impugned order is upheld and the appeal, being bereft of any merit, is hereby dismissed. Accordingly, interim relief granted on May 30, 2013 also stands vacated," the Tribunal said.
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The Tribunal also said that Gillette India "should have behaved like a proactive and responsible entity by immediately putting its machinery into gear and doing everything possible to work in consonance with the law to protect the interests of the market."
According to a Securities and Exchange Board of India (Sebi) norm, all listed companies in the private sector are required to comply with minimum public shareholding of 25%.
SAT, last month, had ordered the capital market regulator to investigate violations of of this norm.
Gillette India is owned by The Procter and Gamble Co. (P&G), the world's largest consumer goods company.
Promoters currently hold 88.76% of Gillette India, as per latest data with the stock exchanges.
In October 2012, the company had proposed a three-stage plan to bring down the promoter holding to 75%, which was turned down by Sebi as it involved re-classification of a top company executive as non-promoter entity.
"We fail to understand as to why the appellant does not comply with the requirement of 25% of public holding by adopting a simple and straight forward approach. Through one of the methods elucidated by Sebi, Instead of adopting a contentious and circuitous method which is against the spirit of law, as one proposed by them presently," SAT said today.
The Tribunal also noted the delay on part of the company to come up with a proposal to achieve the minimum public shareholding.
"It is clear from the records that the first amendment to the Securities Contracts Regulation was made on June 4, 2010 and that the appellant (Gillette India) waited for more than two years to draw up the scheme," the Tribunal added.
