In January 2000, RIL had issued Rs 12 crore equity shares to 38 allottee entities.
The allotment was made consequent to the exercise of the option on warrants attached with non-convertible secured redeemable debentures (NCD) issued in the year 1994.
The regulator alleged that the 6.83 per cent stake, which was acquired by RIL’s promoters together with persons acting in concert (PACs) in 2000, was in excess of the ceiling of 5 per cent prescribed in the takeover code.
On January 21, 2002, Sebi said it received a complaint from one Mr S Gurumurthy alleging irregularities in the preferential issue of NCDs and shares to the entities associated with the promoters of RIL. Following the complaint, Sebi conducted investigation into the matter.
Under Sebi rules, if a promoter acquires more than 5 per cent of voting rights in any financial year then they have to make a public announcement to acquire shares.
“It is noted that in the instant matter the noticees (promoters of RIL) have been alleged to have failed to make public announcement to acquire shares of RIL and deprived the shareholders of their statutory rights / opportunity to exit from the Target Company and therefore they breached the provisions of Takeover Regulations. Such charges against the noticees make the instant matter grave,” Sebi said in an order on Wednesday.
On February 24, 2011, Sebi issued show cause notices to the promoters of RIL. In August 2011, some of the entities filed settlement applications. On May 15, 2020, Sebi rejected their settlement applications.
The promoters of RIL submitted before Sebi that it has initiated legal proceedings after a significant lapse of time. That is after a period of 17 years from the issuance of the warrants (in the year 1994) and 11 years from the acquisition of the equity shares upon conversion of warrants (in the year 2000).
“… investigation generally is a detailed process involving analysis of various data, gathering of evidences, etc. that shall stand the test of legal scrutiny at various judicial fora. This, generally, consumes considerable time and efforts depending on the number of entities involved, the complexity of the transactions, correspondences with the entities involved etc.” Sebi said.
The regulator further said that following the submission of the investigation report and further examination relating to the various issues involved in the matter, the various enforcement actions including the present adjudication proceedings for alleged violation of the takeover regulations were approved on September 15, 2010. Hence, there is no delay on the part of Sebi, it said.