Sebi bars Rajarathinam from accessing capital market

Our Markets Bureau

Mumbai, Aug 8: The Securities and Exchange Board of India (Sebi) has debarred P Rajarathinam and his group companies from accessing the capital market for failing to make payment to the shareholders of Deve Paints (formerly Garware Paints) for the open offer of the paint company.

Sebi, in a statement on Wednesday, said that this action (debarment) will hold good till P Rajarathinam and his group companies pay the consideration to all the shareholders of Deve Paints who had accepted the offer, along with interest at 15 per cent per annum from May 20, 1995.

In March 1995, P Rajarthinam and his associate companies decided to acquire 20 per cent shares of Deve Paints through the open offer at Rs 40 per share. However, after the closure of the open offer, the acquirers (P Rajarathinam and his associates) failed to make the payment of consideration within four weeks of the closure of the offer.

Sebi started examining the reasons for the payment failure within the specified time. But, during this process, some shareholder of Deve Paints got a stay on the offer by moving to the Principal District Munsif Court, Coimbatore. The court restrained the acquirers from completing the offer formalities, ie, making the payment, and this was also informed to Sebi by P Rajarathinam.

However, Sebi said that no steps were taken by the acquirer to seek vacation of the stay obtained by shareholders of Deve Paints. “With the withdrawl of the suit filed by the shareholders, there was no restraint in any court of law staying the completion of offer formalities,” Sebi said.