This document provides a summary of recent legal updates and orders from the Securities Appellate Tribunal (SAT) regarding delays in filing required disclosures under various regulations of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. It discusses three SAT orders that dismissed appeals of penalties imposed by SEBI for delays in disclosures. The document also summarizes several consent orders issued by SEBI to settle delays in filing required disclosures upon payment of settlement charges. Finally, it provides a table summarizing several adjudicating officer orders from SEBI imposing penalties on companies for violations of various disclosure regulations.

1. Takeover Panorama
A Monthly Newsletter by Corporate Professionals
Year VIII-Vol VIII
September Edition

2. 2
Legal Update
 SAT order in the matter of M/s. Coimbatore Flavors & Fragrances Limited, Mr. Benny Abraham and Mrs. S. Subashini
 SAT order in the matter of M/s. E-Ally Consulting (India) Private Limited, M/s. Shree Jaisal Electronics and Industries Limited and others
 SAT order in the matter of Mr. Vijay Jain, Mrs. Urvashi Jain, Mrs. Sunita Jain and others
 Consent Order in the matter of Mr. Santhosh J. Karimattom
 Consent Order in the matter of M/s.IFL Promoters Limited
 Consent order in the matter of M/s. Welspun India Limited
 Adjudicating Officer/WTM Orders
3
Latest Open Offers
10
Regular Section
 Open offer Escrow Account under SEBI (SAST)Regulations,2011
13
Market Update
16
Our Team
17
Insight

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The Hon’ble Tribunal held that penalty shall be imposed proportionately can be contended only when very high penalty has been imposed.
SAT order in the matter of M/s. Coimbatore Flavors & Fragrances Limited, Mr. Benny Abraham and Mrs. S. Subashini
Facts: M/s. Coimbatore Flavors & Fragrances Limited (Appellant 1) had delayed in making disclosure as required under Regulation 8(3) of SEBI (SAST) Regulations, 1997 by 30 days for the year ended 2003, Mr. Benny Abraham (Appellant 2) had delayed in making disclosures as required under Regulation 30(1) and 30(2) read with 30(3) of SEBI (SAST) Regulations, 2011 for the year ended 2012 by 10 days and Mrs. S. Subashini (“Appellant 3”) had delayed in making disclosure as required under Regulation 8(1) and 8(2) of SEBI (SAST) Regulations, 1997 for the year ended 2003 and 2005 by 38 days and 5 days respectively. Accordingly SEBI imposed a penalty of Rs. 2,00,000 eachon Noticee 1 and Noticee 2 and Rs. 2,50,000 on Noticee 3 for the aforesaid violations.. Being aggrieved by the direction of SEBI, the Appellants has filed the appeal before Hon’ble Tribunal and contended that:
 Penalty imposed is very high and it should be imposed proportionately.
 Delay was due to inadvertence and was purely unintentional in nature.
 There are no complaints from any investors claiming loss as a result of delayed disclosure and no loss caused to any investors.
Issues: Whether the penalty imposed by the SEBI on the appellants is justified?
Decision: After taking into considerations the facts and circumstances of the case, the Hon’ble Tribunal held that contention made by Appellants that penalty shall be imposed proportionately can be contended when very high and shocking penalty has been imposed by SEBI, but in this particular case no high penalty has been imposed. Accordingly SAT dismissed the case and found no order to the cost.
LEGAL UPDATES

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The Hon’ble Tribunal held that obligation to make disclosure is mandatory and is independent of the obligation to make disclosures under the listing agreement.
SAT order in the matter of M/s. E-Ally Consulting (India) Private Limited, M/s. Shree Jaisal Electronics and Industries Limited and others
Facts: M/s. E-Ally Consulting (India) Private Limited, M/s. Shree Jaisal Electronics and Industries Limited, Mr. Sandeep Maloo, Mrs. Neeta Maloo, Mr. Labhchand Maloo, Mrs. Lata Maloo, Sandeep Maloo HUF, Labhchand Maloo HUF (“Appellants”) had delayed inmaking disclosures as required under Regulation 30(1) and 30(2) read with 30(3) of SEBI (SAST) Regulations, 2011 by 15 days. Accordingly SEBI imposed a penalty of Rs. 3,00,000 for the aforesaid violations on the Appellants. Being aggrieved by the direction of SEBI, the Appellants have filed the appeal before Hon’ble Tribunal and contended that:
 Appellants who are current/ existing promoters have acquired the company in the year 2011-2012. Although all regulatory requirements were duly complied with declaration under regulation 30(1) and 30(2) read with regulation 30(3) of SAST Regulations, 2011 were delayed by 15 days due to lack of proper advise from professional consultants.
 In all the subsequent years declarations have been made within the stipulated time and therefore inadvertent delay of 15 days in the initial year deserves to be condoned.
 There was no fraudulent intention or improper motive behind the delay in making disclosures.
 There are no complaints from any investors claiming loss as a result of delayed disclosure.
 Disclosures made in compliance with the provisions contained in the listing agreement contained all particulars that are required to be made under regulation 30(1) and 30(2) read with regulation 30(3) of SEBI (SAST) Regulations, 2011 and therefore delay of 15 days being only a technical delay, lenient view ought to have been taken by the AO.
Issues: Whether the penalty imposed by the SEBIon the appellants is justified?
Decision: After taking into considerations the facts and circumstances of the case, the Hon’ble Tribunal held that obligation to make disclosures under regulation 30(1) and 30(2) read with

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The Hon’ble Tribunal held that obligation to make disclosure is mandatory and is independent of the fact that whether trading in shares were done or not at the time of default.
regulation 30(3) of SEBI (SAST) Regulations, 2011 is mandatory and is independent of the obligation to make disclosures under the listing agreement. Similarly, fact that proper advise was not there or that the delay was unintentional/without any fraudulent intention or there is no complaint from the investors, does not absolve appellants from their obligation to make disclosures under SEBI (SAST) Regulations, 2011.Accordingly SAT dismissed the appeal with no order to cost.
SAT order in the matter of Mr. Vijay Jain, Mrs. Urvashi Jain, Mrs. Sunita Jain, Mrs. Shivani Jain and Vijay Jain (HUF)
Facts:
Mr. Vijay Jain, Ms. Urvashi Jain, Ms. Sunita Jain, Ms. Shivani Jain and Vijay Jain (HUF) (hereinafter collectively referred as “Appellants”) had delayed in making the disclosures as required under Regulation 30(2) and 30(3) of SEBI (SAST) Regulations, 2011 by 147 days. Accordingly SEBI imposed a penalty of Rs. 3,00,000 for the aforesaid violations on the Appellants. Being aggrieved by the direction of SEBI, the Appellants have filed the appeal before Hon’ble Tribunal and contended that:
 Since declaration under Regulation 8(2) of SEBI (SAST) Regulations, 1997 was made, failure to make disclosure under Regulations 30(2) and 30(3) of SEBI (SAST) Regulations, 2011 was only a technical irregularity for which imposition of penalty was improper.
 There was no trading in the shares of the company during such period of default.
Issues: Whether the penalty imposed by the SEBI on the appellants is justified?
Decision: After taking into considerations the facts and circumstances of the case, the Hon’ble Tribunal held that failure to make disclosure under each regulation constitutes independent offence attracting independent penalty irrespective of the fact that whether the trading in shares were done at the particular time of default, in the present case, obligation to make disclosures under regulation 30(2) and 30(3) of SEBI (SAST) Regulations, 2011 is of mandatory in nature

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irrespective of declaration under Regulation 8(2)of SEBI (SAST) Regulations, 1997, Accordingly SAT dismissed the appeal and found no order to the cost.
Consent order in the matter of M/s. Cityman Limited
Mr. Santhosh J. Karimattom (“Applicant”), is one of the promoter of M/s. Cityman Limited (“Target Company”) had voluntarily filed the consent application in respect of delay in compliance of Regulation 6(3) for the year 1997, 7(1) for the year 2010 and 8(2) for the year 1998 to 2009 of SEBI (SAST) Regulations, 1997. It was observed by Internal Committee that the Target Company had settled delayed compliance of Regulation 6(2), 6(4) and 8(3) of SEBI (SAST) Regulations, 1997 by settlement order dated 4th April, 2013 and three promoters of Company had settled Regulation 3(3), 3(4), 6(3), 7(1A), 8(2) and 10 of SEBI (SAST) Regulations, 1997 by settlement order 28th June, 2013. Internal Committee observed that only the delay from December 27, 2010 to January 07, 2012 in filing requisite disclosure under Regulation 7(1) of SEBI (SAST) Regulation, 1997 remains to be settled. Further Committee also observed that the delay under Regulation 13(1) and 13(4) of SEBI (PIT) Regulations, 1992 is also remains to be settled from December 27, 2010 to January 07, 2012.
The applicant proposed to settle the above non-compliances on the payment of Rs. 6,16,875 towards settlement charges. The terms as proposed by the applicant were placed before High Power Advisory Committee (HPAC) and on the recommendation of HPAC, SEBI settle the above non compliances.
Consent order in the matter of M/s. IFL Promoters Limited
M/s. IFL Promoters Limited (“Applicant”) has voluntarily filed the consent application in respect of delay of 1073 days for the year 2009 and 343 days for the year 2011 for filing the requisite disclosure under 8(3) of SEBI (SAST) Regulation, 1997. It was also observed by Internal Committee that Applicant that there was delay in compliance of Regulation 7(3) along with 8(3) of SEBI (SAST) Regulations, 1997 and Regulation 13(6) of SEBI (PIT) Regulations, 1992.
The applicant proposed to settle the above non-compliances of Regulation 7(3) and 8(3) of SEBI (SAST) Regulations, 1997 and Regulation 13(6) of SEBI (PIT) Regulations, 1992 on the payment of Rs. 6,16,000 towards settlement charges. The terms as proposed by the applicant

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were placed before High Power Advisory Committee (HPAC) and on the recommendation of HPAC, SEBI settle the above non compliances.
Consent order in the matter of M/s. Welspun India Limited
M/s. Welspun India Limited (“Applicant”) has voluntarily filed the consent application in respect of delayed compliance of Regulation 7(3) of SEBI (SAST) Regulations, 2011 and Regulation 13(6) of SEBI (PIT) Regulations, 1992. It was also submitted by the Applicant that there was a delay of 5 days in compliance of Regulation 13(6) of SEBI (PIT) Regulations, 1992 and due to acquisition of shares on April 07, 2010 by Welspun Fintrade Private Limited, there was a delay of 5 days in compliance of Regulation 7(3) of SEBI (SAST) Regulations, 2011 and Regulation 13(6) of SEBI (PIT) Regulations,1992.
The applicant proposed to settle the above non-compliances of Regulation 7(3) of SEBI (SAST) Regulations, 2011 and Regulation 13(6) of SEBI (PIT) Regulations,1992 on the payment of Rs. 3,44,532 towards settlement charges. The terms as proposed by the applicant were placed before High Power Advisory Committee (HPAC) and on the recommendation of HPAC, SEBI settle the above non compliances.

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Adjudicating/WTM orders Target Company Noticee Regulations Penalty Imposed/ Decision Taken
M/s. Avail Holdings Limited
M/s. Avail Holdings Limited
Regulation 8(3) of the SEBI (SAST) Regulations, 1997 Rs. 23,00,000
M/s. B & A Packaging India Limited
M/s. Amrex Marketing Private Limited and M/s. Bhubanesh Commercials Private Limited
Regulation 29(1) read with Regulation 29(3) of the SEBI (SAST) Regulations, 2011
Rs. 2,00,000
M/s. Capital Trade Links Limited
M/s. Capital Trade Links Limited
Regulation 8(3)of the SEBI (SAST) Regulations, 2011
Rs. 10,00,000
M/s. Capital Trade Links Limited
Mr. Udit Agrawal, Ms. Rashmi Agrawal, Mr. Suresh Chand Agrawal, Mr. Harish Agrawal (HUF), Suresh Chand Agrawal (HUF), Mr. Madhur Agrawal and Mr. Harish Chandra Agrawal
Regulation 30(1) and 30(2) read with Regulation 30(3) of the SEBI (SAST) Regulations, 2011 and Regulation 7(1) read with Regulation 7(2) of the SEBI (SAST) Regulations, 1997
Rs. 15,00,000
M/s. Essen Supplements India Limited (now known as Square Four Projects India Ltd.)
M/s. Essen Supplements India Limited (now known as Square Four Projects India Ltd.)
Regulation 8(3) of SEBI (SAST) Regulations,1997
Rs. 5,50,000
M/s. Essen Supplements India Limited (now known as Square Four Projects India Ltd.)
Mr. Natwarlal L Kanani,
Mr. Mayur N Kanani,
Mr. Kishorekumar Paun and others
Regulation 7(1A) read with 7(2) of SEBI (SAST) Regulations, 1997
Rs. 19,00,000
M/s. Focus Industrial Resources Limited
M/s. Focus Industrial Resources Limited
Regulation 8(3) of SEBI (SAST) Regulations,1997
Rs. 2,00,000

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HINT OF THE MONTH
M/s. Gee Gee Granites Limited
M/s. Gee Gee Granites Limited
Regulation 8(3) of SEBI (SAST) Regulations,1997
Rs. 6,00,000
M/s. Gee Gee Granites Limited.
Mr. Gopichand Idandas, Mr. Sunil G. Duseja, Mr. R. Sekar and others
Regulation 30(2) read with 30(3) of SEBI (SAST) Regulation, 2011
Rs. 15,00,000
M/s.Waverly Investments Limited
M/s. Mega Resources Limited
Regulation 7(1) read with Regulation 7(2) and Regulation 11(1) read with Regulation 14(1) of SEBI (SAST) Regulation, 1997
Rs. 52,00,000
M/s. One Source Ideas Venture Limited
M/s. One Source Ideas Venture Limited
Regulation 8(3) of the SEBI (SAST) Regulations, 1997
Rs. 5,00,000
M/s. Southern Fuel Limited
M/s.Southern Fuel Limited
Regulation 8(3) of SEBI (SAST) Regulation, 1997
Rs. 10,00,000
M/s. Southern Fuel Limited
M/s. Shivamani and Company Private Limited, Mr. K. Vijay Anandh and Mr. C. V. Kaleeswaran
Regulation 8(1) and 8(2) of SEBI (SAST) Regulation, 1997 and Regulation 30(2) read with 30(3) of SEBI (SAST) Regulation, 2011.
Rs. 13,00,000
M/s. Waverly Investments Limited
M/s. Hooghly Mills Project Limited and M/s. Hooghly Stocks & Bonds Pvt. Limited
Regulation 11(2) read with Regulation 14(1) of SEBI (SAST) Regulation, 1997
Rs. 50,00,000
If the regulatory approvals required for completing the open offer and acquisition are delayed, the acquirer may be unable to make the payment within 10 working days of closure of open offer. In such an event, SEBI may grant extension of time for making payments, subject to the acquirer agreeing to pay interest to the shareholders of the target company for the delay at such rate as may be specified by SEBI. If statutory approvals are required for some but not all shareholders, the acquirer can make payment to such shareholders in respect of whom no statutory approvals are required in order to complete the open offer.
{As substantiated from FAQ of SEBI on SEBI (SAST) Regulations, 2011}

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Target Company
M/s. Dynacons Technologies Limited
Registered Office
Mumbai
Net worth of TC
Rs. 2,592.95 Lacs(31.03.2014)
Listed At BSE and NSE
Industry of TC
Comm. Trading &
Distribution
Acquirer
Mr. Arun Govil
Target Company
M/s. Matru-Smriti Traders Limited
Registered Office
Mumbai
Net worth of TC
Rs. 78,01,856 (31.03.2014)
Listed At BSE
Industry of TC Finance (Including NBFCs)
Acquirer-
M/s Shreeji Corporate
Solutions & Trade
Private Limited
Details of the offer:Offer to acquire 1,41,368 equity shares at a price of Rs. 15/- per fully paid up equity share payable in cash.
Triggering Event:Share Purchase Agreement (SPA) for the acquisition of 3,56,278 (65.63%) Equity Shares and control over Target Company.
Triggering Event:Share Purchase Agreement (SPA) for the acquisition of 28,180,652 (35.93%)Equity Shares and control over Target Company.
Details of the offer:Offer to acquire 2,03,90,006 equity shares at a price of Rs. 1.30/- per fully paid up equity share payable in cash.
Latest Open Offers

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Target Company
M/s Palred Technologies Limited
Registered Office
Hyderabad
Net worth of TC
Rs. 8643.09 Lacs (31.03.2014)
Listed At BSE and NSE
Industry of TC
IT Software Products
Acquirers
Mr. Palem Srikanth Reddy along with Ms. Stuthi Reddy
Target Company
M/s R. R. Corporate Securities Limited
Registered Office
New Delhi
Net worth of TC
Rs. 130.10 Lacs
(31.03.2014)
Listed At DSE
Industry of TC
Financing
Acquirers
M/s RV Buildtech & Amusement Private Limited
Details of the offer:Offer to acquire 8,32,000 Equity Share at a price of Rs. 5/- per fully paid up equity share payable in cash.
Triggering Event:Share Purchase Agreement (SPA) for the acquisition of 17,43,870 (54.50%)Equity Shares and control over Target Company.
Triggering Event: There is no triggering event, Acquirer holds 89,20,607 Equity Shares representing 22.85% of the share capital of Target Company.
Details of the offer:Offer to acquire 1,01,49,700equity shares at a price of Rs. 16.70/- per fully paid up equity share payable in cash

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Target Company
M/s Josts Engineering Company Limited
Registered Office
Mumbai
Net worth of TC
Rs. 1523.04Lacs (31.03.2014)
ListedAt BSE
Industry of TC
Industrial Machinery
Acquirers and PACs
Mr. Jai Prakash Agarwal, Mr. Vishal Jain, Mr. Krishna Agarwal, Mr.Abhishek Agarwal, J. P Agarwal & Sons (HUF), Mr. Rajendra Kumar Agarwal, Mrs. Anita Agarwal, Mrs. Shikha Jain
Triggering Event: Share Purchase Agreement (SPA) for the acquisition of 3,69,910 (48.38%) Equity Shares and control over Target Company.
Details of the offer:Offer to acquire 1,98,810 Equity Shares at a price of Rs 410/- per fully paid up equity share payable in cash.

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Regular Section: Open Offer Escrow Account under SEBI (SAST) Regulations, 2011
Meaning & Purpose:
Escrow Account is an account wherein the acquirer is required to deposit some percentage of the offer price, in an escrow account before issuing a Detailed Public Statement. This serves as a security for performance of acquirer’s obligations under the open offer. SEBI (SAST) Regulations, 2011 have made detailed provisions regarding the Escrow Account. These provisions are contained in regulation 17 of SEBI (SAST) Regulations, 2011. The purpose of these provisions is to ensure that the acquirer has sufficient funds to pay the consideration under the offer and he has secured sufficient financial arrangement.
I. Timing of opening of Escrow Account: [Regulation 17(1)]
The Acquirer shall open an escrow account atleast two working days prior to the date of Detailed Public Statement.
II. Amount to be deposited in Escrow Account: [Regulation 17(1)]
Sl. No.
Consideration payable under
the Open Offer
Escrow Amount
Example
a.
On the first Rs. 500 Crores
25% of the consideration
Consideration = 50 Cr.
Amount to be deposited in Escrow = 12.50 Cr.
b.
On the balance consideration
An additional amount equal to 10%
Consideration = 520 Cr.
Amount to be deposited in Escrow
(25% of 520Cr) + (10% of 520 Cr)
=130cr.+52cr. = 182Cr.

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It is further provided that where offer is made conditional upon minimum level of acceptance, then higher of following two shall be deposited in the Escrow Account:
Hundred percent of the consideration payable in respect of minimum level of acceptance
Fifty per cent of the consideration payable under the open offer
If the Acquirer makes any upward revision in the open offer, whether by way of increase in offer price, or of the offer size, then the Acquirer shall make corresponding increases to the amount kept in escrow account prior to making such revision. [Regulation 17(2)]
III. Mode of Deposit in Escrow Account: [Regulation 17(3)]
(a) Cash Deposit with any scheduled commercial bank
(b) Bank guarantee issued in favor of the manager to the open offer by any scheduled commercial bank
(c) Deposit of frequently traded and freely transferable equity shares or other freely transferable securities with appropriate margin subject to compliance with regulation 9(2).
Important Points:
Applicable Regulation
Details
17(4)
Bank Guarantee or Deposit of Security
Deposit at least 1% of the total consideration payable in cash with schedule commercial bank as part of Escrow Account.
17(5)
Cash deposit
Empower the manager to the open offer to instruct the bank to issue a banker’s cheque or demand draft or to make payment of the amounts lying to the credit of the escrow account
17(6)
Bank Guarantee
The bank guarantee shall be in the favor of manager to the offer and shall be kept valid throughout the offer period and additional 30 days after the payment to the shareholders who

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have tendered their shares have been made.
17(7)
Securities
Manager to the Open Offer shall be empowered to realize the value of escrow account by way of sale or otherwise.
Further in case of any shortfall in the amount in the escrow account, such shortfall shall be made good by the Manager.
IV. Release of amount from Escrow Account
The amount lying in escrow account can be released in the following cases only:
1. In case of withdrawal of offer, the entire amount can be released only after certification by the merchant banker.
2. The amount deposited in escrow account is transferred to special bank account opened with the
Bankers to an issue; however the amount so transferred shall not exceed 90% of the cash deposit.
3. The balance 10% is released to the acquirer on the expiry of thirty days from the completion of all obligations under the offer.
4. The entire amount to the acquirer on the expiry of thirty days from the completion of all obligations under the offer where the open offer is for exchange of shares or other secured instruments.
5. In the event of forfeiture of amount, the entire amount is distributed in the following manner:
5.1. One third of the amount to Target Company;
5.2. One third of the escrow account to the Investor Protection and Education Fund established under SEBI (Investor Protection and Education Fund) Regulations, 2009;
5.3. Residual one third is to be distributed to the shareholders who have tendered their shares in the offer

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Jindal Saw’s Overseas unit acquires PSL North America LLC
Jindal Saw Limited through its subsidiary incorporated in USA naming Jindal Tubular USA LLC has acquired the assets of PSL Limited North America LLC, a US-based steel pipe maker through bankruptcy proceedings, the company provided the details in a filing with stock exchange.
Religare buys part of portfolio management ‘Prime Broking Limited’
Religare Global Asset Management through its subsidiary Religare Portfolio Managers & Advisors acquired Prime Broking Limited, part of N Jayakumar's Prime group.The purchase by Religare will lead to expand the PMS space however the size of the deal and asset acquired are not disclosed in the market.
Astral Poly Technik Picks Up Majority Stake In Seal It Services
Astral Poly Technik has acquired a majority controlling stake of 80% in UK based manufacturer of adhesives and sealants, Seal It Services Limited, for INR 440 Mn. Astral is planning to consolidate its adhesive and sealant business and is in the process of expanding its manufacturing capabilities in India, the company said in a filing.
Market Updates

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Disclaimer:
This paper is a copyright of Corporate Professionals (India) Pvt. Ltd. The entire contents of this paper
have been developed on the basis of SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 and latest prevailing SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 in India. The author and the company expressly disclaim all and any liability to any
person who has read this paper, or otherwise, in respect of anything, and of consequences of
anything done, or omitted to be done by any such person in reliance upon the contents of this paper.
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