Rashmi Saluja, the chair of Religare, had said that the Burman family was not “fit and proper” for the acquisition, while the Burman group had claimed that Saluja and the Religare board were impeding the open bid. | File image
Religare Enterprises (REL), a non-banking financial business, has been instructed by the Securities and Exchange Board of India (Sebi) to apply to regulatory bodies by July 12 in order to obtain the statutory clearances required for the Burman family’s open offer.
Rashmi Saluja, the chair of Religare, had remarked that the Burman family was not “fit and proper” for the acquisition, while the Burman group had claimed that Saluja and the board were impeding the open bid.
In September of last year, the Burman group purchased an additional 5.7% of REL, exceeding the 26% threshold and necessitating the open offer requirement. The board did not submit an application for an open offer, according to a letter from REL to Sebi, claiming that the acquirers were not “fit and proper.”
According to the market watchdog, REL has not provided any records or proof of the purported flaws.
“The exercise of said right by the shareholders cannot be held hostage to the designs of the existing management of the target company, especially in such cases where the existing management is apparently hostile to the acquirers and faces a conflict of interest in facilitating the acquisition of shares /control by the acquirers in an open offer, due to proposed change in control,” Sebi stated.
The regulations only allow the corporation to submit an open offer and grant current shareholders the option to sell their shares if their ownership of the entity exceeds the 26 percent threshold. REL, however, has not applied for more than nine months, according to Sebi.
The Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), and Sebi have all received directives from Sebi requesting clearance.
The REL board had received a letter from the market regulator on May 31 requesting that they submit an application for the open offer within 15 days prior to the order.
But in a June 10 response, the REL board said that Sebi’s letter was unjustified, without authority, and an example of regulatory overreach.
“A remedy is required wherever a right exists. When the market regulator responded to the REL’s inquiries on whether Sebi had overreached its authority, it stated that Sebi would be failing in its duty if steps were not made for the enforcement of the rights of numerous stakeholders, most notably the investors.
According to Sebi, each regulator would take the claims into account when evaluating applications for open offers, in light of the fit and suitable standards.
The market regulator has also requested an explanation from the REL board regarding why no action should be taken against them regarding the claimed claims in the order cum show-cause notice.