In a significant development, the Securities and Exchange Board of India has issued directives to Linde India Ltd. regarding its transactions with related parties, specifically Praxair India Pvt. and Linde South Asia Services Pvt.
This directive follows the Securities Appellate Tribunal's decision on May 22, overturning an interim order by SEBI and instructing the National Stock Exchange to appoint a valuer to assess the valuation of these transactions, prompted by shareholder complaints.
SEBI's whole-time member Ashwani Bhatia expressed concern over LIL's attempt to proceed with transactions that had previously been rejected by shareholders, despite legal opinions obtained by the company.
Bhatia emphasised that these actions could not be justified, highlighting that a valuation exercise would have clarified whether such decisions required shareholder approval.
The regulatory order mandates NSE to appoint a registered valuer to evaluate the business impact of transactions between Linde India and Praxair India, including those forming Linde South Asia Services under a joint venture agreement.
Additionally, LIL is required to reimburse NSE for the valuation expenses incurred. Going forward, SEBI has instructed LIL to assess the materiality of future related-party transactions based on threshold norms.
Linde India, formerly known as BOC India, operates in the manufacturing and sale of industrial, medical, and special gases, alongside equipment and related products.
The company's evolution includes a name change following its acquisition by Germany-based Linde AG in 2006, and later, its involvement in the global merger between Linde AG and Praxair Inc. in 2018, leading to the formation of Linde Plc.
Following this directive, Linde India must disclose the findings of the valuation report to its audit committee and board of directors within two weeks of receipt.
This disclosure is expected to include management comments, underscoring transparency in related-party transactions moving forward.
For Linde India, these regulatory steps mark a pivotal phase in ensuring compliance with SEBI's norms on related-party transactions, setting a precedent for corporate governance in the Indian market.
(With inputs from PTI)
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