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Stakeholders Empowerment Services (SES), a proxy advisory firm, has pulled up Fresenius Kabi Oncology Ltd (FKOL) for its proposal for delisting itself from the bourses without giving any valid reasons.
The firm, which works towards the education of the stakeholders on corporate governance issues, has also questioned the FKOL’s rationale behind announcing the delisting within six months of offer-for-sale (OFS).
FKOL, formerly known as Dabur Pharma Ltd, is a subsidiary of Fresenius Kabi Singapore and develops, manufactures and markets speciality pharmaceutical products in the area of cancer.
The Singapore parent firm holds 81 per cent in FKOL and offered to acquire the balance 19 per cent from public.
The stock today closed at Rs 129.10, down 1.45 per cent. The promoter had expressed its intention to pay an indicative price of up to Rs 130 a share to acquire the shares.
Offer for sale
SES’s founder J.N. Gupta, in a recent report, asked why was the company not going for follow-on offer for sale (OFS) although current price is higher than what was prevailing at the time of first OFS.
Through the OFS, the promoters had sold 1.42 crore shares and reduced their shareholding to 81 per cent (reduction by exactly 9 per cent) in October 2012 at around Rs 82 a share.
He further added that the OFS could have been made by the company with the sole objective of increasing its public shareholding and complying with the law. However, he said, having failed to achieve the required public shareholding and subsequently changing its plans and going for delisting, the company may be deemed to have been ineligible for OFS route if it had no intention of increasing public holding to minimum 25 per cent.
The market regulator SEBI had introduced the concept of OFS last year to enable companies to comply with minimum public shareholding norms.
“In our opinion, the company has violated a provision of SEBI that says unless the company has valid and acceptable reasons (acceptable to SEBI) for changing its plan to increase public shareholding to the 25 per cent threshold, it cannot go for the same,” Gupta added.
SES also recognised that price can fluctuate and may not be the sole reason for any decision.
It further said, in the report, that the company will more likely than not miss the June 30, deadline for meeting the minimum public shareholding norm.
“We also feel that if regulator SEBI does not find any flaw in the plan or process adopted by the company, the same will give a golden opportunity to all non-compliant companies to get an extension to achieve compliance without facing any regulatory problem,” Gupta said.
> priyanka.pani@thehindu.co.in
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