The Securities Appellate Tribunal on Wednesday stayed the show cause notice issued to Religare Enterprises Ltd by the Securities and Exchange Board of India (Sebi) in its 19 June order.
The tribunal granted Religare time till 22 July to comply with the regulator’s directions.
Religare had challenged Sebi’s order, which mandated the company to seek approval from regulatory authorities, including the RBI, for the Burman Family’s open offer by 12 July.
The Sebi order had also required Religare’s chairperson Rashmi Saluja and five others to explain why they should not be barred from capital market activities.
Prior to September 2023, the Burmans held 21.54% shares of Religare Enterprises. In fact, on 25 September 2023, the Burmans under Sebi’s Substantial Acquisition of Shares and Takeovers, Regulations, announced that they were to increase their stake by 5.27% in Religare, taking their shareholding beyond 25% in the non-banking financial services firm, which essentially would trigger an open offer.
A bench led by Justice Dinesh Kumar asked Sebi to file a reply within four weeks and posted the matter for further hearing on 26 August.
Burmans’ open offer
Burmans had proposed an open offer to buy 9 crore shares of face value of ₹10 each, representing 26% stake at ₹235 apiece for a total consideration of ₹2,115 crore.
Since then, the Burmans and Saluja have been at loggerheads over the acquisition. Burmans claimed that Saluja was creating hinderance by objecting to the open offer. Saluja, however, dismissed any such allegations and said that the Burman family was not ‘fit and proper’ for the company’s acquisition.
Senior counsel Ravi Kadam, appearing for Religare, sought time to apply to the regulators till 22 July without prejudice to their rights and contentions.
The senior counsel argued that the “The acquirers (Burmans) have been allegedly accused in the Mahadev betting scam and were named in the FIR. Therefore they did not fulfil the ‘fit and proper’ criteria” for acquisition.
He added that Religare has also approached the Delhi high court seeking directions to Sebi to conduct investigation in the Burman Group based on the representations made by Religare to Sebi. The matter is pending and will be next heard on 20 August.
In November 2023, the Mumbai police had reportedly booked 32 individuals, including Dabur group director Gaurav Burman and chairman Mohit Burman in connection with an alleged betting scam.
Sebi’s counsel said, “In this process, the company actually has little or no role to play. The company cannot say that you are not an appropriate shareholder and therefore I can place any kind of obstructions, that right is left to the shareholders”.
The acquisition was completed in January this year when Burman’s informed in an official statement that they acquired 25.18% in Religare enterprises.
Last year, Religare had written to the market’s regulator, objecting to the open offer on the grounds that Burmans were not ‘fit and proper’ for the acquisition. While Sebi in its response, asked the financial services firm to provide documents supporting any such allegations made by them.
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According to the Sebi order, on 31 May the regulator disposed of the contentions by Religare and asked it to apply to the relevant regulators within 15 days. While also clarifying that the ‘fit and proper’ allegations against Burmans will be dealt with separately by each regulator once the applications have been filed.
“SEBI’s letter advising Religare to make application to RBI, IRDAI and SEBI was unwarranted, without jurisdiction and resulted in a regulatory overreach as the same clashed with the powers of the Board of Directors of REL and the exercise of regulatory discretion by other regulators, which was best avoided. The same needed immediate reconsideration”, Religare said in response to Sebi’s 31 May letter.
The Burmans, through letters dated December 2023 and February 2024, complained to Sebi about the lack of cooperation and support from Religare, which impeded their efforts to provide the necessary information for obtaining regulatory approval and completing the open offer process.