TaxTMI 
TaxTMI 
2025 (11) TMI 691
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....appeal is directed against order dated September 27, 2023 passed by the AO Adjudicating Officer, SEBI Securities and Exchange Board of India imposing a monetary penalty of Rs. 25,00,000/- on the Appellant under Section 15H(ii) of SEBI Act, 1992 Securities and Exchange Board of India, 1992 for the violation of Regulation 3(3) of SEBI (SAST) Regulations, 2011 Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. 2. We have heard Mr. Ramesh Chandra Mishra, learned Advocate for the Appellant and Mr. Manish Chhangani, learned Advocate for the Respondent. 3. Brief facts of the case are, SEBI conducted an investigation in the scrip of Metkore Alloys and Industries Limited ('Metkore' for s....
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....kore for more than three years prior to July 2, 2015. Appellant is having 61.11% shareholding in Mynah Industries Limited. Mynah Industries Limited has 100% shareholding in Atlanta Natural Resources Private Limited. Atlanta Natural Resources Private Limited has 100% shareholding in Cronimet Mercon Invest Limited. Cronimet Mercon Invest Limited is having 70.48% shareholding in Metkore Alloys and Industries Limited. Thus appellant became the ultimate promoter of Metkore. On May 17, 2010, M/s Atlanta Natural Resources Pte. Ltd., along with PAC Mynah Industries Limited gave an open offer letter. Therefore, mandatory obligation of open offer did not get triggered and no penalty is leviable. 5. In reply, Shri Manish Chhangani, learned Advocate....
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....ontentions and perused the records. 8. The point that arises for our consideration is whether appellant is entitled for exemption from making open offer? 9. Undisputed facts of the case are, appellant was holding 30,00,000 shares in Metkore Alloys and Industries Limited by the quarter ended June 2015. On July 2, 2015, he acquired 1,62,60,304 shares of Metkore from Cronimet Mercon Invest Limited, which increased his shareholding from 4.26% to 27.35%. 10. In terms of Regulation 3(3) of SAST Regulations, appellant had to make an open offer, since, he crossed the stipulated threshold of 25% shareholding in the target company. He did not make an open offer, instead, claims that he is exempted under Regulations 10(1)(a) of SAST Regulatio....
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....ing in concert for a period of not less than three years prior to the proposed acquisition and are disclosed as such pursuant to filings under the listing agreement, and any company in which the entire equity share capital is owned by such shareholders in the same proportion as their holdings in the target company without any differential entitlement to exercise voting rights in such company ............ 12. In order to claim exemption under Regulation 10(1)(a), appellant ought to have complied with the procedural requirements as mentioned in Regulation 10(5), (6) and (7) of SAST Regulations which reads as follows: '5) In respect of acquisitions under clause (a) of sub-regulation (1), and clauses (e) and (f) of sub-regulation (4....
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....regulation (6) and sub- regulation (7) in the case of convertible securities, the date of the acquisition shall be the date of conversion of such securities. (Emphasis supplied) 13. Thus, to get the benefit of exemption, the appellant, under Regulation 10(5) ought to have intimated the stock exchanges where the target company is listed; under Regulation 10(6), he ought to have filed a report with the stock exchange: and under Regulation 10(7), he ought to have submitted a report within 21 working days of the acquisition. 14. It was urged by Shri Chhangani that the above provisions were not complied with by the appellant. SEBI has also asserted this aspect in its written submissions Para 6 of SEBI's written submissions. This f....