The Hindu Business Line : SC upholds SEBI decision on Colour Chem takeover

THE Supreme Court has pronounced its verdict on the Colour Chem case pertaining to an open offer for 20 per cent to minority shareholders by the company's overseas parent under the takeover rules.

The apex court upheld the SEBI order on the case regarding interest to be paid to the minority shareholders, but reduced the rate to 10 per cent per annum from 15 per cent prescribed by the stock market regulator.

The court also said that the dividend paid to the shareholders would be deducted from the amount of interest payable to the minority shareholders.

"The court ruled that only those persons who held the (Colour Chem) shares in March 1998 and continued to hold the shares till date were entitled to payment of interest," Mr Mahesh Agarwal, advocate for Clariant International Ltd, the overseas parent of Colour Chem, told Business Line.

After Clariant AG of Germany took over from Hoechst the entire shareholding in Colour Chem (through Clariant International, a subsidiary of Clariant AG,), the SEBI initiated proceedings under the domestic takeover norms.

On October 16, 2002, the SEBI directed Clariant International to make an open offer taking November 21, 1997 as reference date and to pay to tendering shareholders an interest of 15 per cent per annum from March 22, 1998 till the date of payment after closure of offer.

Clariant went in appeal before the Securities Appellate Tribunal (SAT), which ordered that 15 per cent interest would be payable only to those shareholders who continuously held the shares from March 22, 1998 till the date of offer.

SAT had rejected Clariant plea to reduce the interest rate and deduction of dividend from the interest payment.

Wimco case

The apex court also passed judgement on a case related to Wimco. It ruled that the inter se stake transfer between the joint promoters made the takeover norms applicable.

In the court's opinion, the acquisition of shares by Swedish Match, overseas parent of Wimco, triggered the SEBI takeover norms.

See also Page 15

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