A major hurdle in the way of the Reliance Power Ltd (RPL) mega public issue?touted as the largest to hit the market?has been cleared.
In a significant development, the Securities & Exchange Board of India (Sebi) disposed of a complaint filed by Rajkot Saher/Jilla Grahak Suraksha Mandal (RSGSM), representing minority shareholders, alleging that the company violated Sebi disclosure & investor protection guidelines in spirit to unjustifiably benefit the promoters.
While disposing of the complainant?s submission, the orders of Sebi whole-time members TC Nair and VK Chopra will form the basis for the clearance of the issue by the market regulator?s primary market department and subsequent processing of RPL?s application.
The order states that 20% of the promoters? contribution would be locked in for five years and adequate disclosures in this regard would have to be made by the company as well as its lead managers to prospective shareholders.
The company had filed a draft red herring prospectus with Sebi in October 2007 and planned to raise over Rs 20,000 crore by issuing 130 crore shares through a book-built issue before the fourth quarter of calendar 2007 came to an end. Company sources say they are ready and able to hit the market in three weeks after all other clearances are received.
Ramjibhai B Mavani, founder president, RSGSM, told FE, ?The Sebi directions, prima facie, seem to favour RPL investors as the promoters? shareholding will be locked in for a period of five years.? RSGSM was represented by senior advocate N Venkatramanan and Mohammef Shaffique while RPL was represented by senior counsel Rohit Kapadia, Yash Kapadia and DJ Kapadia.
Sebi took up the matter following an order passed by the Bombay High Court on November 1, 2007 asking the market regulator to deal with the matter ex parte and dispose of RSGSM?s representation. The RSGSM complaint filed on October 18, 2007 related to the draft red herring prospectus filed by RPL with Sebi on October 3, 2007.
It submitted that the promoters of REL transferred certain high value projects such as those at Rosa, Sasan, Butibori, Shahpur, Shahpur, Urthing and Dadri to a company 50% owned by REL and 50% by REL promoters.
Busy day for regulator
In a yet another step aimed at reforming the Indian capital market, Sebi has proposed a fast-track mechanism for the clearance of mutual fund schemes on the lines of the fast-track issue of capital. The regulator has invited public comments on its proposals up to January 15, 2008.
Sebi simultaneously announced key amendments to the equity listing agreement. These pertain to the utilisation of proceeds from an IPO. It has also issued amendments to the corporate electronic filing and dissemination system, which has been mandated for 100 companies. The markets regulator on Thursday also gave its approval to both BSE and NSE launch mini derivatives contracts on the Sensex and Nifty, respectively. The move follows the recommendations of the derivatives market review committee.