Tribunal Upholds Takeover Regulations 2011 Over 1997 Regulations, Affirms Public Announcement Order

The Tribunal held that the Takeover Regulations, 2011 applied, not the 1997 Regulations, as they were in force at the time of equity shares allotment. The trigger date for public announcement was the conversion date, not the subscription date. An 'acquirer' is one who acquires shares or voting rights, with voting rights acquisition occurring on the conversion date. The impugned order directing a public announcement and interest payment was upheld, requiring the appellants to comply. The appeal was dismissed, affirming the obligations imposed by the impugned order.

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Issues Involved:
1. Applicability of Takeover Regulations, 1997 vs. 2011.
2. Determination of the trigger date for public announcement.
3. Interpretation of 'acquirer' and 'acquisition' under the Takeover Regulations.
4. Validity of the impugned order directing public announcement and interest payment.

Summary:

1. Applicability of Takeover Regulations, 1997 vs. 2011:
The appellants argued that the Takeover Regulations, 1997 should apply since they agreed to acquire shares on June 23, 2010. They contended that they became 'acquirers' upon subscribing to the warrants, not on the conversion date of December 19, 2011. The Tribunal, however, noted that the Takeover Regulations, 2011 were in force at the time of the actual allotment of equity shares, thus applicable.

2. Determination of the trigger date for public announcement:
The appellants claimed that the trigger date should be the date of subscription to the warrants, not the conversion date. They relied on the case of Sharad Doshi vs. The Adjudicating Officer and Ors., which emphasized transparency and shareholder benefit. The Tribunal, referencing previous judgments, held that the trigger date for the Takeover Code is the date of conversion of warrants into equity shares, not the date of subscription.

3. Interpretation of 'acquirer' and 'acquisition' under the Takeover Regulations:
The Tribunal reiterated that an 'acquirer' is defined as a person who acquires or agrees to acquire shares or voting rights. The acquisition of voting rights is crucial for invoking the Takeover Code. The Tribunal cited previous cases, including Shri Ch. Kiron Margadarsi Financiers vs. Adjudicating Officer, SEBI, and Mr. Sohel Malik vs. SEBI & Anr., to support the stance that the acquisition of voting rights occurs on the conversion date.

4. Validity of the impugned order directing public announcement and interest payment:
The Tribunal upheld the impugned order dated July 8, 2013, which directed the appellants to make a combined public announcement to acquire shares and pay interest to shareholders. The Tribunal found no fault in the order, noting that the appellants' collective shareholding increased significantly upon conversion of warrants, thus triggering Regulation 3(2) of the Takeover Regulations, 2011. The Tribunal also dismissed the appellants' request for a monetary penalty instead of a public announcement, distinguishing the present case from Sunil Khaitan vs. SEBI due to the promptness of the proceedings.

Conclusion:
The appeal was dismissed with no order as to costs, affirming the requirement for the appellants to make a public announcement and pay interest as directed by the impugned order.

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