In an 11-year-old case, the Sebi on Wednesday imposed a total penalty of Rs 25 crore on Asia’s richest man Mukesh Ambani along with his brother Anil Ambani and other individuals and entities for non-compliance with takeover norms.
What is the case and charges levied?
In an acquisition dated 2000, RIL's promoters and Persons Acting in Concert (PAC) failed to disclose the acquisition of more than 5 per cent stake in the company. In its 85-page order, Sebi said RIL's promoters had acquired 6.83 per cent stake in the company through conversion of 3 crore warrants issued to them back in 1994, as per PTI report.
In 2005, brothers Mukesh and Anil parted their ways and went solo from the business empire created by their father Dhirubhai Ambani. In the probe, Sebi found that 6.83 per cent shares acquired by RIL promoters along with PACs followed with the exercise of option on warrants attached with non-convertible secured redeemable debentures were above the ceiling of 5 per cent approved under the takeover regulations.
It was obligatory fo the entities to make a public announcement on acquiring the shares on January 7, 2000, the same date on which the PACs were allotted RIL equity shares on exercise of warrants issued in January 1994. However, it was found that the promoters and PACs did not make disclose anything publicly for acquiring the shares.
In failure to announce the acquiring shares in public, it is alleged that they have violated the provisions of the takeover regulations.
Who are penalised along with Mukesh Ambani?
Others who have been penalised by the security watchdog include Nita Ambani wife of Mukesh Ambani, Tina Ambani (wife of Anil Ambani), K D Ambani and other family members.
What’s the norm?
Under Sebi norms, a promoter group who has acquired more than 5 per cent of the voting rights, in any financial year ending March 31, is supposed to make an open offer to minority shareholders.
"No quantifiable figures or data are available on record to assess the disproportionate gain or unfair advantage and amount of loss caused to an investor or group of investors as a result of the default committed by the noticee," the Securities and Exchange Board of India (Sebi) noted.
"However, the fact remains that the noticees by their failure to make public announcement deprived the shareholders of their statutory rights/ opportunity to exit from the company," it added. The penalty of Rs 25 crore has to be paid jointly and severally, by the individuals and entities concerned, as per Sebi order.
In the case, there were 34 noticees, including entities that have now merged with Reliance Industries Holding Pvt Ltd.
(With inputs from PTI)