The Hindu Business Line : SEBI rejects Jagran Prakashan promoter's move to hike stake

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Chennai Jan. 29 The promoter Group of Jagran Prakashan, a media company, has been denied permission to hike stake in the company without having to make an open offer for acquiring additional shares from the public.

This follows a ruling by the Securities and Exchange Board of India on an application made by an investment company associated with the promoter Group, seeking exemption from the provisions of the Takeover Code in connection with the latter's proposal to acquire between one to three per cent of shares in the company.

The proposed acquisition suffered from the infirmity of coming close on the heels of a public issue of shares by the company, according to the independent panel of experts constituted by SEBI to look into matters pertaining to the Takeover Code.

The Takeover Code imposes an obligation on an investor in the shares of a listed company, acquiring substantial chunks of such shares, to also acquire additional shares from the general public through an open offer. Where the investor in question already owns significant shares either directly or in combination with persons acting in concert with it, regulations require that even marginal acquisitions of shares trigger such an open offer.

But the Takeover Code also provides for an exemption from the requirement of such an open offer to the public on application made by the investor.

The expert panel which evaluated the investment company's request, felt that there was no `reason for this application for exemption', when there was a `public issue' (of shares) in the recent past.

The SEBI order reaffirms the independent panel's view.

Though the Panel did not spell out its criterion of `recent past' for denial of exemption, it would seem that a passage of time of around a year would fall within its scope. Jagran Prakashan, it may be recalled, made a public issue of shares in January 2006.

Jagran Prakashan's shares closed at Rs 330.10 at the NSE on Monday, down by Rs 4.75 from the previous day (Friday)'s close of Rs 334.85.

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