Listing agreement interpretation allows interim dividend record date shortly before payment under the 30-day gap rule.

Clause 16 of the Model Equity Listing Agreement was interpreted to mean that the 30-day interval applies between two successive book closures and record dates, not between a book closure and a single record date. On that reading, fixing the interim dividend record date shortly before payment did not create investor prejudice or practical inconsistency with dividend payment timelines. The stock exchanges were therefore directed, on a prima facie basis, to announce 25 September 2014 as the record date for interim dividend, while the regulator remained free to examine the issue on merits in appropriate proceedings.

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Issues: Whether, on a prima facie interpretation of clause 16 of the Model Equity Listing Agreement, the 30-day gap requirement applies between two book closures and record dates or between a book closure and a record date, and whether the record date fixed for interim dividend could be directed to be announced.

Analysis: Clause 16 uses the expression "two book closures and record dates", indicating that the 30-day gap is referable to successive book closures and record dates, not to a single book closure followed by a record date. Reading the clause otherwise would create practical difficulty where dividend declared at the AGM has to be paid within the statutory period and could conflict with the timetable for payment of dividend. The announced payment schedule also showed no prejudice to investor interest in fixing the record date shortly before payment.

Conclusion: The challenge to the record date objection was prima facie accepted in favour of the appellant, and the stock exchanges were directed to announce 25 September 2014 as the record date for interim dividend.

Final Conclusion: The appeal was disposed of by granting interim relief to the appellant on the interpretation of clause 16, while leaving SEBI free to decide the issue on merits in appropriate proceedings.

Ratio Decidendi: The 30-day interval in clause 16 of the listing agreement applies to the gap between two book closures and record dates, not to the gap between a book closure and a record date.

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