Companies move court on Sebi code

CALCUTTA/HYDERABAD, March 11: Two takeover targets, Rassi Cements and Indian Aluminium challenged the validity of Sebi's takeover code sayin...

CALCUTTA/HYDERABAD, March 11: Two takeover targets, Rassi Cements and Indian Aluminium challenged the validity of Sebi’s takeover code saying that they would take the help of court to solve the present imbroglio.

On behalf of Indal, the coordination committee of Indal unions said today that they would challenge the takeover regulations of 1997 as announced by Sebi and was weighing legal options.

The General Secretary of the All India Coordination Committee of Indal unions, Sital Dey said in Calcutta that the current takeover guidelines had prompted a company like Sterlite Industries to make a public announcement for acquiring stake in Indal. Hence, they would take legal action.

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The Indal unions’ outburst comes at a time when in a separate case filed by Raasi Cements, Andhra Pradesh High Court observed that the open offer of Chennai-based India Cements Ltd (ICL) to acquire shares Rassi shall be finalised only after clearance by the Union government and Sebi.

In the case of Raasi, the division benchcomprising Justice D Reddappa Reddy and Justice K B Siddapa passed the interim order yesterday on a petition filed by Raasi Cements challenging the constitutional validity of the takeover code 1997 issued by the SEBI. Chennai-based India Cements has made an open offer to acquire 20 per cent shares of RCL on March 2. However, RCL stated the ICL already has 18 per cent shares of the company either directly or through others.

It was contended that Section 108-A of the Company’s Act prohibits acquisition of more than 25 per cent shares of a private company without prior approval of the Union Government.

It was also contended that the SEBI takeover code was contrary to the provisions of the Company Act and constitution of India. The Andhra court has thus ruled that the permission of both Union government and SEBI must be taken before the ICL takes over the present management.

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In Calcutta, the management-backed, Unions the credentials of Sterlite Industries, owned by Anil Agarwal, were not beyond doubts.

Inthis context, Dey said the takeover guidelines should be framed in such a way so that trade unions could play a greater role in these matters. The committee strongly believed that Alcan, the Canadian promoter, was fully committed to Indal, and there was no need for Sterlite’s interference in the running of the company at this moment. They had also sent memoranda to the chiefs of different financial institutions like LIC, UTI, and GIC, which jointly hold nearly 35 per cent of Indal’s equity, requesting them to study carefully the implications of Sterlite’s offer.