TaxTMI 
TaxTMI 
TaxTMI 
2014 (12) TMI 1437
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....on Delhi Stock Exchange (for short "DSE") pursuant to the listing agreements between the company, on the one hand, and BSE and DSE, on the other. The agreements were executed on 17.10.1986. Reinhold Poersch Gmbh, the promoter of Hella India, holds 51% of its share capital. In July, 2005, Hella India decided to have its shares delisted from both the Stock Exchanges in accordance with the provisions contained in the Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003 (for short "the guidelines"). In January, 2006, a voluntary offer was made to the public shareholders to acquire their shares as per the guidelines. The offer was made by a public announcement through Padmini Engineering Private Limited, the first respondent herein, which is an affiliated entity of the promoter of Hella India. The approval of the shareholders was obtained by a special resolution which was passed in the extraordinary general meeting of the shareholders of Hella India in September, 2005. The promoter of Hella India determined the floor price of Rs. 52.39 per share which was later turned out to be the exit price for delisting of securities in accordance with the book building p....
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....s Contracts (Regulation) Act, 1956 (for short "Rules"), which was substituted with effect from 07.06.2001, and eventually came to hold as follows: "...We have already noticed the provisions of Rule 19(2)(b). Companies which fulfil the conditions of clause (b) have to maintain at least 10 per cent of public shareholding out of their total voting capital and others who do not fulfil those conditions have to maintain a minimum of 25 per cent. It is common ground between the parties that Hella India does not fulfil the conditions laid down in clause (b) of Rules 19(2) of the Rules. It has, therefore, to maintain a minimum level of 25 per cent of public holding for continuous listing. This condition which forms part of the listing agreement when read with clauses (4), 8(8) and 12 of the guidelines would make it clear that if the public shareholding of Hella India was ever to fall below 25 per cent, it would become eligible to get delisted. As already noticed earlier, acceptance by the acquirer of the shares offered by the public would bring the public shareholding of Hella down to 18.63 per cent of its total equity share capital. This level of public shareholding entitles Hella India ....
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....r holding of an existing listed company as on April 01, 2001 is less than the limit of public shareholding as required at the time of initial listing, the company shall within one year raise the level of non-promoter holding to at least 10%. In case the company fails to do so, it shall buy-back the public shareholding in the manner provided in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997." 11. Learned counsel for the appellants has also drawn our attention to Rule 19(2)(b) of the Rules, which has been brought in by way of amendment. The said Rule deals with requirements with respect to the listing of securities on a recognised stock exchange. The relevant portion of Rule 19(2)(b) reads as under: "19(1) **** **** *** (2) Apart from complying with such other terms and conditions as may be laid down by a recognised stock exchange, an applicant company shall satisfy the stock exchange that" (a) *** *** *** (b) At least 10 per cent of each class or kind of securities issued by a company was offered to the public for subscription through advertisement in newspapers for a period not less than two days and that applications received in pursuance of ....
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....reen to bring transparency to the delisting process. 8.5 In the event of securities being delisted, the acquirer shall allow a further period of six months for any of the remaining shareholders to tender securities at the same price; 8.6 The stock exchanges shall monitor the possibility of price manipulation and keep under special watch the securities for which announcement for delisting has been made. 8.7 To ascertain the genuineness of physical securities if tendered and to avoid the bad delivery, Registrar and Transfer Agent shall co-operate with the Clearing House / Clearing Corporation to determine the quality of the papers upfront. 8.8 If the quantity eligible for acquiring securities at the final price offered does not result in public shareholding falling below required level of public holding for continuous listing, the company shall remain listed." Thus, the aforesaid Clause basically stipulates as regards the exit price for delisting in accordance with the procedure and also enumerates the role of the stock exchange. 13. At this juncture, it is apt to refer to Clause 12.1 which provides for minimum number of shares to be acquired. The said Clause reads as foll....
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....rchase of shares in terms of clauses 8.1 to 8.3. The said exercise has to be completed within a period specified in clauses 8.1 and 8.5. The whole process has to be monitored by the Stock Exchange and the Registrar and transfer agency has to ascertain the genuineness of the physical securities tendered, etc. Clause 8.8 has its own signification. Clause 8.8 of 2003 guidelines stipulate that required level of public shareholding must fall below the level of continuous listing. Clause 12.1 of 2003 guidelines, states that the offer of delisting would fail if the public shareholding does not fall below the minimum limit specified by the listing conditions or the listing agreement. It is quite vivid that the 2003 guidelines do not prescribe or fix the required level of public shareholding of continuous listing though the said limit must be breached for an offer of delisting to succeed. It is condign to note that clause 12.1 refers to minimum limit specified by the listing condition or the listing agreement. 18. As is evincible, Rule 19(2)(b) provides that at least 10% of each class or kind of securities must be offered to public for subscription through advertisement in newspaper during....