The Securities and Exchange Board of India (Sebi) has barred P Rajarathinam, his associates and their group companies from accessing the capital markets until they pay the shareholders of Deve Paints (formerly Garware Paints) the consideration against an open offer in 1995 to take over the company.
The acquirers had entered into a memorandum of understanding with Deve Paints' promoters to acquire 17.01 per cent of their voting capital at Rs 40 per share. An open offer to acquire a 20 per cent share was also made by the company.
However, the acquirers failed to pay the shareholders within the stipulated four weeks of the open offer closing on April 21, 1995.
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Sebi was contemplating action against the acquirers who claimed that a court case in the matter (the principal district munsif court of Coimbatore had restrained the acquirer from giving effect to the letter of offer on May 23, 1995) prevented them from completing the formalities.
Though the shareholders withdrew the case on February 1, 1999, still 1,285 shareholders had not received their money.
Sebi sent a show-cause notice to the acquirers to which they did not reply nor did they respond to a public notice for a personal hearing on December 22, 2000.
The acquirers will also have to pay interest at 15 per cent from May 20, 1995, to the shareholders.