Comments
Even though the Munjal-Burman combine’s bid for Fortis Healthcare (FHL) has not proposed any open offer, going by SEBI regulations, such an offer could automatically get triggered, experts told BusinessLine .
SEBI rules on takeover and acquisition state that an open offer is triggered when any acquirer buys 26 per cent stake in a company or when there is a change in management control.
Hero Enterprise and the Burman family of the Dabur group had proposed to pick up a 16.80 per cent stake in the company though preferential allotment of equity and warrants.
While the bid may not cross the shareholding threshold to trigger SEBI’s takeover code, they may have to make an open offer due to their intention to take management control of the company.
“To me the Munjal-Burman bid triggers SEBI’s takeover code and an open offer will have to be made if their proposal is consummated, as their media statements show they are taking control of FHL,” said JN Gupta, founder-promoter, Shareholder Empowerment Services, a proxy advisory firm.
Mohit Burman, Director, Dabur India, told BusinessLine : “The situation has changed in the past few days and we will take legal opinion. If it necessitates an open offer, so be it.”
As per Regulation 4 of SEBI’s Substantial Acquisition of Shares and Takeover (SAST) regulations, an acquirer has to make an open offer if an acquirer’s actions amount to a change in control of the company.
“Acquisition of control is not restricted to quantum of shareholding of the acquirer in the target company. In the absence of any shareholding in a target company also, a person can exercise control over the target company,” said Vinay Chauhan, Partner, Corporate Law Chambers India. “If the acquirer specifically makes public statements outlining its intentions vis-a-vis the key financial or strategic operations, affairs, policies or related decisions of the target company going forward, then it triggers an open offer.”
The Munjal-Burman offer was approved by the board members of the company. While the board members who approved the bid have resigned, the Munjal-Burman bid still has a legal sanctity unless the new board members seek a review, experts said.
Tempest voted out
Our New Delhi Bureau reports that Fortis’ shareholders voted in favour of the removal of Brian Tempest, a director on the company’s board, in an extraordinary general meeting (EGM) on Tuesday.
The shareholders also approved the appointment of Indrajit Banerjee, Ravi Rajagopal and Suvalaxmi Chakraborty as independent directors of the company.
In a submission to the National Stock Exchange and the BSE on the results of the voting in the EGM on Wednesday, the company pointed out that the other three directors proposed to be removed — Harpal Singh, Sabina Vaisoha and Tejinder Shergill — had tendered their resignation prior to the EGM and, thereby, had ceased to be directors of the company.
“Accordingly, the said resolutions for their removal had become infructuous,” the submission stated.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.