The Securities Appellate Tribunal on Wednesday instructed Religare Enterprises Ltd. to comply with the SEBI directive, clearing the path for the Burman family to increase their stake in the financial services company.
However, as a partial relief to Religare, the appellate tribunal has stayed the show cause notice issued to the company and its board.
This decision stems from an SEBI order dated June 19, which directed Religare to provide an undertaking within seven days. The undertaking required Religare to apply to regulatory authorities, including the RBI by July 12, to get necessary approvals for the Burman family's proposed open offer.
Additionally, Religare was instructed to take all necessary steps to assist the acquirers in meeting their obligations under the SAST Regulations, 2011.
Religare, in response to the SEBI order and seeking to block the Burman family's deal, filed an appeal with SAT.
The Burman family, the promoter of Dabur India, had recently increased their stake in Religare to nearly 25%. They had arranged through JM Financial Services Ltd. to acquire more than 1.73 crore equity shares, constituting 5.27% of the equity share capital, with a maximum price of Rs 235 per share on any recognised Indian stock exchange.
Since Religare operates as a non-banking financial company, the Burman family's acquisition plans were contingent upon obtaining regulatory approvals. These approvals were crucial as they would have pushed their shareholding beyond the 25% mark, thereby triggering the mandatory open offer.
In a countermove, Religare Enterprises had filed a writ petition before the Delhi High Court, requesting a forensic investigation into the Burman Group's acquisition process. Their concerns centered on the acquirers' compliance with the "fit and proper" criteria.
SEBI noted that the Burman family had made a public announcement regarding share acquisition as early as Sept. 25, 2023, nearly nine months ago. Despite continuous efforts to obtain necessary approvals from Religare, the required cooperation was not forthcoming.
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