Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 - Regulations 10, 20(8), 8- Non-compete fee - Liability of the acquirer company to pay, to the public C shareholders of the target company - Held: Acquirer company not liable to pay non-compete fee to the public shareholders of the target company as it was being paid to the outgoing promoters of the target company which is being taken over by the acquirers - Ordinarily when there is a gap D of 25% between the consideration paid to the outgoing promoters and the non-compete fee, SEBI ought not to conduct any inquiry - However, if it appears to SEBI that the difference between the offer price and the non-compete fee is less than 25% but that is nevertheless a disguise or a E camouflage for reducing the cost of acquisition through a public offer, then SEBI can certainly delve further into the matter - On facts, SEBI erred in splitting the non-compete agreement between the acquirers and 5 members of the outgoing promoters on the one hand and 15 members on the F other - It cannot be, on a reading of the non-compete agreement as a whole, that a part of it is a sham in respect of some of the contracting parties and it is a genuine agreement in respect of the other contracting parties - No indication that non-compete agreement is severable - Thus, tribunal erred in holding only a part of the non-compete agreement as a G sham - However, pursuant to the entering of non-compete agreement, non-compete period of three years has expired and Takeover Code has been substituted by the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 which does away with the concept of a separate non-compete fee, the amount being included in the offer price - Directions and orders passed by SEB/ and the tribunal aside - Subsequent events. |
Judge | Hon'ble Mr. Justice Madan Bhimarao Lokur |
Neutral Citation | 2014 INSC 993 |
Petitioner | I.p. Holding Asia Singapore P. Ltd. & Anr. |
Respondent | Securities & Exchange Board Of India |
SCR | [2014] 8 S.C.R. 399 |
Judgement Date | 2014-08-20 |
Case Number | 7390 |
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