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Sebi closes proceedings against Mallya's 3 group firms

Press Trust of India  |  New Delhi 

Regulator Sebi has closed its adjudication proceedings against three group firms of for alleged disclosure lapses in a 17-year-old case citing liquidation of a holding company, but did not rule out any penal action at a later date.

Sebi said it had observed certain non-compliances by three companies while examining the letter of offer made by Zuari Fertilizers and Chemicals Ltd, along with other entities including United Breweries (Holdings) Ltd, Finvest Ltd and to acquire shares of and (MCFL).

MCFL had seen a fierce takeover battle in 2015 between Pune-based and Kolkata-based Zuari group which had support of Mallya-led promoters.

However, the present case relates to a transaction in January 2001 when - United Breweries (Holding) Ltd -- had acquired 2 crore shares representing 16.88 per cent of MCFL pursuant to the allotment made under the Board of Industrial and

The acquisition was exempted from open offer obligations, but no disclosure was made by the firms, all of whom were promoters and firms at that time, as required under Sebi's takeover regulations.

Sebi had initiated adjudication proceedings in February 2017 for alleged violation related to share purchase disclosures and takeover norms and had issued show-cause notices to three UB group entities.

The regulator, however, has now said that one of the three noticees - -- was later ordered to be wound up following a court order and the liquidator has taken possession of all its assets.

It observed that the adjudication process cannot be taken to a logical conclusion at this juncture against a company under liquidation.

About United Breweries Ltd, Sebi said the documents available on record show that the company was later demerged into UB Beer Ltd and subsequently, a fresh certificate of incorporation was issued in the name of UB Breweries Ltd.

The liabilities and obligations of the demerged company were deemed to be transferred to the resulting company and therefore liabilities incurred by in the present case are deemed to be transferred to the Since this company later after a fresh incorporation became United Breweries Ltd, it was under obligation to discharge the liabilities of the erstwhile which existed in 2001, Sebi said.

About another firm, Ltd (which was earlier known as McDowell & Co Ltd), Sebi said it was also part of the group during the relevant time and was under obligation to make disclosures along with other promoters.

However, the shares were received by only United Breweries (Holdings) Ltd, which is under liquidation and it may not be just to proceed ahead against two other companies at this juncture.

In a six-page order, the regulator said "taking into consideration the facts/circumstances of the case and material available on record", the matter cannot be proceeded with, but "this order shall not prejudice the right of Sebi to initiate any action including adjudication at a later stage".

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 18:45 IST