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Bajoria went against takeover code: CLB

Richa Mishra

NEW DELHI, July 5

THE Company Law Board (CLB) has held that Mr Arun Kumar Bajoria and others, acting in concert, have gone against the provisions of Regulation 7 of the Take Over Code by not disclosing their acquisition beyond five per cent shares in Bombay Dyeing & Mfg. Company Ltd.

CLB also found fault with the Bajorias for not complying with requirements of the Regulation. ``We find that the letter dated March 16, 2000 cannot be construed to be a `disclosure' in terms of Regulation 7,'' it said. The regulation requires that an acq uirer `shall disclose' to the company within four days of the acquisitions, if it exceeds five per cent.

It also said that the register of members in respect of all shares acquired beyond five per cent deserves to be rectified, ``...but we are not doing so as the shares in excess of five per cent have already been reportedly transferred as permitted by Sect ion 111 A (5) of the Companies Act, 1956 during the pendency of the present proceedings.''

CLB was considering the petition filed under Section 111 A of the Act. The petitioner company (Bombay Dyeing) had sought rectification of the register of members of Bombay Dyeing & Mfg. Co. Ltd by deleting the names of the respondents (Bajoria & others) in respect of the shares impugned in the petition on the ground that these respondents had failed to comply with Regulation 7 of SEBI (Substantial Acquisition of Shares & Take Over) Regulations, 1997 (Take Over Code).

The petition was originally filed before the Western Region Bench. It was later transferred to the Northern Region Bench with the consent of the parties, CLB said.

The petition was filed on the basis of the shareholding of the Bajorias at 5.7 per cent as on June 27, 2000 as per the statement dated July 6, 2000 furnished by the Registrar, CLB said. Only from the various statements filed by the respondents later on, it came to light that they had acquired more than 12 per cent shares as on June 19, 2000, it said.

Once the contravention of the Regulation is established all the shares acquired in contravention will have to be declared invalid and the register had to be rectified, CLB had said. But, in the present case, the Bajorias have transferred substantial perc entage of shares during the pendency of these proceedings and now their holding was below five per cent, the bench said.

``Since transfer of shares during the pendency of the proceedings is statutorily recognised by Section 111 A(5) of the Act, we cannot make any order in respect of the shares already transferred,'' the bench said.

In the present case, the provisions of Section 111A(3) of the Act have been invoked for acquisition of shares beyond five per cent without disclosure and therefore, only shares acquired beyond that percentage will come under the CLB purview in the presen t proceedings, it added.