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A.R. Dahiya v. SEBI - (Supreme Court) (25 Nov 2015)

Supreme Court endeavours to protect shareholders from greedy management


Capital Market

Transaction buying-back shares purporting to transfer over 15 per cent of total shareholding, particularly when conducted between promoters of a company, is not protected from public disclosure under Regulation 3 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The Court held that the rate at which such shares were bought back would have to be disclosed in the announcement. It also added that post-dated cheques given towards the transaction due to the purchaser facing a “liquidity crunch” amounted to a “promise to pay and that promise would be fulfilled on the date mentioned on the cheque.” In the instant case, the Appellant had appealed against various SEBI and Securities Appellate Tribunal orders, amongst which was a valuation of shares for ‘minimum offer price’ wherein the Tribunal had held that the highest price paid by an acquirer for any acquisition would be taken into account in determining the minimum offer price.


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