The Hindu Business Line : SAT sets aside SEBI decision on Uniproducts India delisting

The response to the rights issue was disappointing and so the promoters had to exercise their option of subscribing to the unsubscribed portion of the issue

Our Bureau

Mumbai, Aug. 21 The Securities Appellate Tribunal (SAT) has set aside SEBI’s order directing Uniproducts India Ltd to delist through the reverse book building process and not at the price at which the shares were offered in the company’s rights issue.

Uniproducts had gone for rights issue in February 2007 in order to finance the expansion and diversification of its Rewari plant in Haryana.

The response to the rights issue was disappointing and so the promoters had to exercise their option of subscribing to the unsubscribed portion of the issue.

As a result, the promoter shareholding in the company rose, and the public shareholding declined to 15.65 per cent, which was below the minimum prescribed level.

Later in April 2007, the company decided to buy out the remaining public shareholders at the price of the rights issue (which was fixed at Rs 40) and sought SEBI nod to delist the company.

The SEBI Board had held that certain disclosures in the letter of offer relating to the eights issue were “contrary and ambiguous and do not state the future intention of the company/promoters on the listing status of the securities clearly.”

SEBI held that the disclosures in the letter of offer regarding delisting of the company were contradictory and not true and adequate in accordance with the guidelines, and that the investors could not make an informed decision on the basis of those disclosures.

The board concluded that the disclosures were not in “conformity as per the spirit” of the delisting guidelines and directed the company to delist by following the procedure of reverse book building laid down under the Delisting Guidelines and not at the rights issue price.

However, SAT order said that the board did not point out the so-called contradictions and the ambiguity at the time when it first approved the same letter of offer before opening of the rights issue.

SAT held that no information, much less material information, has been withheld from investors and that the disclosures made were true and adequate.

With the public shareholding going below the minimum level, the promoters had the option to get the company delisted in accordance with the delisting guidelines; SAT found unacceptable the contention that the promoters’ decision to delist the company was contrary to the intention expressed in its letter of offer.

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