IN THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 165 of 2005
Date of Hearing 05/12/2005
Date of Decision 05/12/2005
Appellate Represented by:
Videocon Industries Ltd. Ms. Neeta Rajda and Ms. Dipti
Rajda, Advocates
Versus
Respondent – Represented by
National Stock Exchange of India Ltd. Mr. Ramabhadran, Advocate
Securities and Exchange Board of India Mr. Paras Parekh and Mr.
Ravi Hegde, Advocates
CORAM:
Justice Kumar Rajaratnam, Presiding Officer
C. Bhattacharya, Member
R. N. Bhardwaj, Member
Per: Justice Kumar Rajaratnam, Presiding Officer
1. The appeal is taken up with the consent of parties:
2. The appellant in this appeal has sought for quashing of order dated 18/11/2005 in refusing to grant the appellant in-principle approval for listing of underlying equity shares of GDR/FCCB on an aggregate sum not exceeding Rs. 4,900/- crores. A prayer has also been made that NSE be directed to give in-principle approval for equity shares of GDR/FCCB for the same.
3. It was submitted by the learned counsel for the appellant that under similar circumstances BSE has granted in-principle approval on certain conditions and the letter of BSE reads as follows:
Quote:
“2. In this regard we refer to your letter dated October 5, 2005 and to the appearance of Mr. S. K. Shelgikar and Mr. Saurabh Dhoot before the Listing Committee on October 6, 2005 wherein it was agreed that:
“a) the entire 100% shareholding of Promoters together with persons acting in concert, post all mergers/amalgamations, shall be kept under lock-in till the company undertakes further public issue/ offer for sale in the domestic market in order to raise its non-promoter holding in the company to at least 25% following SEBI DP Guidelines.
“b) company will come out with further public issue / offer for sale in the domestic market following SEBI DIP Guidelines, within one year of listing committee meeting i.e. on or before October 5, 2006.
“c) Company will approach the listing committee for release of lock-in of any of the promoters shares which are required to be pledged with banks / financial institutions, which the committee will consider on a case to case basis.”
“3. The Company vide its letter dated October 10, 2005 has given an undertaking confirming the conditions as above of the listing committee. The Exchange now grants you in-principle approval for listing of underlying equity shares of the GDR/FCCB issue for aggregate sum not exceeding Rs. 4900 Crores ……..”
Unquote
4. It was further submitted that without going into the question whether GDRs are public issue or not or whether the underlying shares are considered to be in the category of promoters’ quota or non-promoters’ quota the appellant undertake to reduce the promoters’ quota to 25% within one year. This Court by an earlier order had held that prima facie GDR/ADR issue would amount to a public issue of shares and would be classified in non-promoter holding category. However, since a settlement was reached, this Court had held by its order dated 30/09/2005 in appeal No. 90/2005 and 117/2005 that the non-promoters quota should be increased to 25% within two years, that was sought to be modified by BSE in its letter granting in-principle approval. NSE had also consented for listing of underlying shares but the time that was granted by the NSE in their consent order was that the non-promoters quota should be increased to 25% within two years from the date of receipt of that order. Here the appellant is willing to increase the non-promoters to 25% within one year from the date of receipt of the order and we do not think NSE an have any objection in respect of the listing agreement.
5. The conditions imposed by BSE will hold good in granting in-principle approval for listing of the underlying shares in so far as NSE is concerned. The learned counsel for NSE Mr. Ramabhadran submitted that the prayer is premature since NSE itself may pass a favourable order. The learned counsel for the appellant relied on a letter from CLSA Equity Capital Markets Limited which reads as follows:
“This is in relation to the proposed issuance of Foreign Currency Convertible Bonds (“FCCBs) / Global Depository Receipts (GDRs) by Videocon Industries Limited (“Transaction”) CLSA Singapore Pte Ltd. has been appointed by Videocon Industries Limited as a Joint Bookrunner and lead manager to the Transaction.
“We wish to advise you that in the event pricing of the FCCBs/GDRs is to be completed by second week of December, 2005 as desired by you, then all the requisite approvals, including the in-principle approvals of the stock exchange in India must have been received by Videocon Industries Limited latest by first week of December, 2005.
“We advise you that having received the in-principle approval from Bombay Stock Exchange Limited, the approval from the National Stock Exchange of India Limited in relation to shares underlying the FCCBs/GDRs must be expedited and we can proceed only upon receipt of approval from NSE as your shares are listed on both the exchanges.”
6. Since the matter will have to be resolved within the first week of December, 2005 and since BSE has already granted in-principle approval we do not think it appropriate to delay the matter any further. It would send a wrong signal to the international market if two reputed stock exchanges take a contrary view in respect of GDRs and ADRs with respect to listing of the underlying shares.
7. In that view of the matter we hereby direct NSE to give in-principle approval for listing of the underlying shares within a period of 3 days from today as has been done by BSE and on the same terms and conditions.
8. Appeal stands disposed of accordingly. No order as to costs.
(Dictated & Pronounced in the Court)
(Justice Kumar Rajaratnam)
Presiding Officer
(R. N. Bhardwaj) (C. Bhattacharya)
Member Member
Place: Mumbai
Date: 05/12/2005