Sebi May Move SC Against SAT Order On Colour Chem

Mumbai, February 27: | Updated: Feb 28 2003, 05:30am hrs
The Securities and Exchange Board of India (Sebi) is planning to move the Supreme Court against the Securities Appellate Tribunal (SAT) order, which allowed overseas acquirer of Colour-Chem Ltd (CCL) -- Clariant International-- to accept shares of only those shareholders who held them at the time of completion of open offer. The open offer process was to be completed by March 1998.

SAT had also ruled that only those shareholders who held shares as on the date specified in the order will be eligible to receive penal interest at the rate of 15 per cent. Some of the shareholders of CCL who were not happy with the SAT order are also planning to move the apex court over this issue, it is learnt.

Sebi executive director in charge of legal department Ms DN Raval told FE : "We have received the SAT order and are studying it in detail. It will take some time to arrive at the final decision."However, Sebi sources indicated that the regulator is contemplating to go in appeal against the SAT order in the CCL case. Sebi insiders feel the SAT order case will set a wrong precedent for future cases of takeover where the foreign parent acquires a controlling stake in its Indian outfit and gets away without providing an exit option to the existing shareholders.

SAT presiding officer, in his order issued last week, had said that those who held the shares of CCL on February 24, 1998, and continue to be the shareholders of CCL on the closure day of public offer, to be made in terms of the directions given by Sebi, alone shall be eligible to receive interest in case the shares which they held on February 24, 1998 were tendered in response to the public offer made in terms of Sebis order and accepted by the acquirer.

SAT had further said that the interest payable by the acquirer shall be at 15 per cent as directed by Sebi and the dividend paid by CCL to its shareholders was not required to be deducted from the interest payable to the shareholders by the acquirer.

SAT, in its order, had refused to agree to the plea of Clariant to cut the penal rate of 15 per cent charged by the Sebi to the shareholders of CCL, but upheld the plea of the acquirer to pay penal interest to only those shareholders who were on the register of the company as on public announcement date -- March 22, 1998. SAT had also refused the demand of the acquirer to cut the rate of penal interest to 10 per cent from 15 per cent, owing to an overall reduction in the Bank Rate from 12-13 per cent in 1997 to eight-nine per cent in 2002-03.