May 22, 2007
The Resident Editor
The Economic Times
Times of India Building
Mumbai – 400 001
Apropos the news item captioned “SEBI cannot decide takeover price” which appeared in the Economic Times, Mumbai edition on May 18, 2007, it needs to be pointed out that the heading of the news item is grossly misleading and wrong.
The caption apparently suggests that SEBI cannot decide takeover price and that the regulator has no role to play in the valuation of shares under takeover scheme. However, the judgement of the Hon’ble Supreme Court, dated May 16, 2007 in the matter of H.L. Somany and others v/s. SEBI makes no such mention. On the contrary, as has been rightly mentioned in the text of the above mentioned news item, the Hon’ble Supreme Court has observed that the Board has to be satisfied that the offer made is reasonable and fair, and in the interest of the shareholders and that the Board as the regulator is not bound to accept the offer price which is required to be incorporated in the public offer, if it suspects that the offer price does not truly represent the fair value of the shares determined in accordance with Regulation 20 (5).
Also, in the case in question, the court dismissed the appeals that had contended that the market regulator had failed to deliver on its duty in valuation of shares under the takeover scheme. The Hon’ble Supreme Court held “we are, therefore, satisfied that the Board committed no error in accepting the report of Patni & Co. The Board has acted in a reasonable manner and made its best efforts to secure a reasonable price for the shares of the shareholders. It has exercised its discretion wisely and we find no reason to interfere.”
It is requested that the above clarification may be published for the benefit of your readers and the newspaper should refrain from the use of such misleading and baseless captions for news items.
for Securities and Exchange Board of India