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Mumbai/Bangalore, Sept. 26 The Securities Appellate Tribunal (SAT) has allowed Sasken Communication Technologies’ appeal, overruling all the directions issued by SEBI on the company’s public notice for buyback of its shares.

The core issue settled by SAT is in relation to whether the offer size of Rs 40 crore is the maximum amount for which the company shall buy shares, as contended by it, or is it the minimum, as contended by SEBI, said an expert familiar with the development.

SAT, in its order issued on Friday, observed: “Public notice-cum-public announcement is a commercial document issued by the company for the attention of its shareholders offering to buy back equity shares, and all its clauses have to be read together and understood in a manner in which a reasonable prudent investor of the company would read and understand. The various clauses of the public announcement, to which reference has been made hereinabove, do not suggest that the company was bound to buy back shares up to Rs 40 crore.”

In this context, SAT further directed Sasken to modify its public announcement to incorporate a clause to the effect that a minimum number of 4 lakh equity shares would be purchased before the company decides to exercise its option to close the offer at its discretion.

SAT also overturned the SEBI’S direction that the buy orders should be placed at or above the market price and that the same should commence within a week from the date of the direction.

SAT observed, “It is no part of SEBI’S duty to advise a purchaser regarding a price at which he needs put in the buy orders. The company has already informed SEBI that the buyback will be from the open market through the stock exchange mechanism. This obviously means that the shares shall be purchased at the prevailing price as determined by the system subject to the maximum price of Rs 260.”

SEBI’S direction that the company immediately commence its buyback was regarded as contrary to regulations, which allow the company to complete the buyback within 12 months of the date of passing of the resolution by its board of directors. The company has the option to commence buyback at any time it thinks appropriate within the set period.

Sasken Communication Technologies Ltd will continue to buy back shares as part of its buyback programme, said the Chief Financial Officer of the company, Ms Neeta Revankar. (Even before today’s decision, SAT had directed Sasken to go ahead with its buyback, pending hearing of its appeal).

Sasken achieved the minimum buyback of four lakh shares on Friday, Ms Revankar said. Of the Rs 40 crore earmarked for buyback, the company has till date bought back shares worth about Rs 5 crore, she added.

Shares of Sasken ended five per cent lower at Rs 128.85 on Friday after touching an intra-day high of Rs 151.

Sasken had announced a share buyback via a public announcement in April. The buyback was priced at up to Rs 260 a share for an aggregate amount not exceeding Rs 40 crore. The offer size represents 9.45 per cent of the aggregate of the company’s total paid-up equity capital and free reserves as on March 31.

However, on May 2, Sasken postponed the buyback after SEBI imposed certain conditions and directives regarding the buyback. Sasken had then filed an appeal before the SAT on August 26, asking to be allowed to proceed with the buyback with the same conditions as set out in its original announcement.

More Stories on : Buyback | Software | Courts/Legal Issues

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