SAT calls for final filings in Fresenius Kabi-Sebi case

Fresenius judgment soon, Osian's hearing adjourned to next month

The Securities Appellate Tribunal (SAT) heard appeals by Fresenius Kabi Oncology Ltd on its delisting bid on Monday.

The market regulator Securities and Exchange Board of India (Sebi) had passed an order on July 22 against Fresenius Kabi Oncology, which required the firm to increase its holdings by an additional five per cent to delist the company.

The tribunal has heard the final arguments and asked for submissions from both the parties. The judgement will be passed after these are made.

Sebi had taken note of investor complaints that entities that purchased shares in an offer for sale (OFS) might have done so to ease the de-listing process.

"Sebi has received complaints from investors alleging, inter alia, that the entities who had purchased shares in the aforesaid OFS might have participated in the OFS with an intent to subsequently tender their shares at an artificial price in the bids for the delisting offer, which will be determined in collusion with the promoters of the company, and thus enable the company to successfully complete the delisting offer," said the Sebi order.

JUDGEMENT SOON

• Fresenius Kabi Oncology argued that the Sebi order to increase the delisting threshold is a legislative act attempted through a quasi-judicial order
• It argued that Sebi had limited role to play in delisting, since it was the exchanges that give permission for this
• Sebi said the order said the pre-OFS threshold would need to be adhered to and no new threshhold was dictated
• Six entities accounted for over 90% of shares sold in OFS, though Sebi has not taken a formal decision to investigate the matter
• SAT calls for final submissions, judgement to be passed soon
• Osian's Art fund hearing adjourned till September 19

Senior advocate Janak Dwarkadas who represented Fresenius Kabi Oncology argued that the Sebi order, which increased the threshold for delisting, is untenable. He argued that increasing the threshold is a legislative act, which is being attempted through a quasi-judicial order. He added Sebi has limited role to play in delisting, since it is the stock exchanges which give permission for the same.

Shiraz Rustomjee, senior advocate representing Sebi, pointed out that the threshold would have been higher had it not been for the OFS, and the Sebi order merely states that the pre-OFS threshold would need to be adhered to.

He also pointed out that six out the 32-34 entities that were part of the OFS accounted for over 90 per cent of the shares sold. He said Sebi had not taken a formal decision to investigate the entities to examine if there were irregularities involved, on being asked about the same by the tribunal.

The tribunal asked for brief submissions from both the parties on the points to be considered. A judgment is expected to be passed soon, according to those handling the matter.

Also appealing against the regulator was Osian's Connoisseurs of Art, which became the first art fund to be categorised as a collective investment scheme (CIS) by the Sebi order dated April 15 this year. The fund had collected money from 656 investors for the purpose of buying art work. It had managed to mop up Rs 102.4 crore.

The hearing for Osian's has been adjourned to September 19.