Shareholders of Bombay Oxygen Corporation Ltd (BOCL) have been waiting for an open offer that was triggered nearly two decades ago. The Finance Ministry has now sought details from SEBI in one of the oldest controversial cases.

In a letter dated February 21 addressed to one of the executive directors of SEBI, the Finance Ministry said it wants a comprehensive review of various agreements entered into by German company Griesheim, Goyal Gases Ltd (GSL) of Delhi and the promoters of BOCL as these agreements triggered open offers on several occasions which are yet to be made.

Investors of BOCL are still fighting their case for an open offer that was allegedly missed either by the promoters of the company or another investor Messer Holdings (MHL) registered in British Virgin Island and GSL of Delhi.

In terms of SEBI’s Takeover Regulations (Regulation 14 of the erstwhile Takeover Regulations, 1997 and Regulation 13(1) of the present Takeover Regulation, 2011), the obligation to make open offer is triggered the moment the acquirer enters into an agreement. Therefore, actual acquisition/ ownership of shares pursuant to the agreement has no bearing upon the obligation of entities to make an open offer.

In May 1995, Griesheim GMbH (Griesheim), a German company, signed an agreement with Goyal MG Gases Ltd (GMG), under which the latter would be invited to participate in any new gas-based business Griesheim undertook in India. Two years later, in June 1997, Griesheim purchased 30 per cent of BOCL from the company’s promoters. This triggered an open offer obligation upon Griesheim, which it made in August 1998. But GMG was also under an obligation to make an open offer since the Share Purchase Agreement (SPA) between Griesheim and GMG dated May 12, 1995, was not disclosed, either in the public announcement or in the open offer document by Griesheim.

Griesheim and GMG were persons acting in concert as defined under the Takeover Regulations; however, the same was never disclosed. Courts too highlighted violation of SEBI Regulation. The Bombay High Court in an order dated March 26, 2003, stated that the SPA entered between Griesheim and GMG was in breach of SEBI Regulations since it failed to disclose the name of GMG (Goyal) which was acting in concert with GMG.

Thereafter, Griesheim formed a joint venture company, MHL with GMG on January 20, 2000, in British Virgin Islands and on February 17, 2000 Griesheim “sold” its entire holding of BOCL shares (50 per cent stake) to MHL and received payment for them in August 2000. MHL did not make an open offer to shareholders of BOCL while intending to acquire 50 per cent shares of BOCL. Incidentally, MHL is a Bearer Share Company and it cannot possibly be an ‘acquirer’ since it cannot fulfil the obligations related to disclosure and PACs as mandated by the Takeover Regulations.

Offloads entire holding

Later, Griesheim did an about-turn in 2002 and “sold” its entire holding of 75,001 shares back to promoters of BOCL, sparking a legal battle for ownership of these 75,001 shares between GMG and the promoters of BOCL.

Between September 2000 and December 2000, Jagdish Vora, a minority shareholder of BOCL, filed four complaints with SEBI highlighting Takeover Code violations in relation to the acquisition of shares in BOCL by Griesheim and subsequent attempt to transfer their shareholding to MHL. After firing a few more intervening letters between 2000-16, Vora sent a legal notice to the regulator in May 2016 and October 2016. Vora has since been fighting the case in various courts.

Subsequently, Vora was informed by SEBI that his complaints pertaining to Takeover Code violations had been unilaterally converted into a ‘grievance redress’ matter under SEBI Complaints Redressal System and sent to BOCL. This was unprecedented, since a violation of Takeover Code cannot be redressed by the Target Company under SCORES and the onus is on SEBI to take action. Vora approached SAT against this order.

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