Disclosure obligation under Takeover Code on ‘promoter-group’, not on every ‘promoter’ in group
SAT sets aside SEBI order, wherein it was held that obligation to make yearly disclosure under Reg. 8(2) of Takeover Regulations, 1997 / Reg. 30(2) of Takeover Regulations, 2011, is on each and every promoter and not on ‘promoter group’ and in case of failure to make disclosure, each and every promoter is liable to pay penalty; Holds that if promoters are ‘individual’ promoters then obligation is on individual promoters and in case there is ‘promoter group’ then ‘promoter group’ is required to make yearly disclosure; States that if promoter group fails to disclose shares / voting rights held by promoters in the group as also their PAC’s within stipulated time, then, penalty is imposable on ‘promoter group’ and would be recoverable jointly and severally; Notes that Reg. 8(2) of Takeover Regulations, 1997 provides for ‘a promoter’ to make yearly disclosure and Reg. 30(2) / 30(3) of Takeover Regulations, 2011 provides for ‘the promoter’ to make yearly disclosure, states that “obligation to be discharged by the promoter would also have to be discharged by the promoter group”; Rejects SEBI’s reliance on General Clauses Act to interpret 'promoter’ to include ‘promoters’ and accordingly obligation to make yearly disclosure would be on individual promoter including promoters included in promoter group; SAT holds “when Takeover Regulations expressly provide that expression ‘promoter’ shall include the ‘promoter group’, SEBI is not justified in contending that in view of the provisions contained in General Clauses Act, the obligation to make yearly disclosure is on every promoter in the promoter group and not on the promoter group”; States that if SEBI’s argument that every promoter is obliged to make yearly disclosure is accepted, then it would mean that every person/member included within meaning of ‘promoter’ would be required to make disclosure, even if he does not hold any shares, terms SEBI’s interpretation as ‘absurd’; SAT opines “if it was intended that every promoter of listed co. must make yearly disclosure, then, Reg. 8(2) or Reg. 30(2) would have commenced with ‘Each promoter’ or with the words ‘Every promoter’; States that as word ‘every promoter’ is not used in case of promoter and expression ‘promoter’ is defined to include ‘promoter group’, SAT opines “it becomes clear that obligation to make yearly disclosure is on promoter/promoter group and not on every promoter in promoter group”; Notes difference of language in Takeover Regulations, 1997 and 2011, however states that under both regulations, basic object is to ensure that, investors in Target co. are informed about no. and percentage of shares / voting rights held by promoter/promoter group and object is not to make it mandatory for every promoter in the promoter group to make individual yearly disclosure even if that promoter neither held nor holds any shares:SAT
The ruling was delivered by Justice J.P. Devadhar and Shri. Jog Singh.
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