Sebi disposes of case against SAL Steel promoters

Capital market regulator Sebi has disposed of the case of takeover norms violation against SAL Steel promoters -- SAL Care Pvt Ltd and Shah Alloys, saying that the alleged breach was "technical and minor".
Sebi said the two entities as promoters "should take utmost care and be more vigilant and careful while consolidating their shareholding in target company (SAL Steel) in future".
Sebi had found that SAL Steel promoters Rajendra V Shah, Ragini R Shah and Rajendra V Shah (HUF) - who collectively held 14.95 per cent stake in the company - had transferred their entire shareholding between December 7-9 2011 to SAL Care. Shah Alloys, a promoter group entity of SAL Steel was the Person Acting in Concert (PAC) to SAL Care.

It was alleged by Sebi in the show cause notice that as a result of the acquisitions, there was an increase of more than 5 per cent stake of SAL Care along with the PAC Shah Alloys.
Further, the acquisitions had also allegedly resulted in a change in control of SAL Steel and therefore the acquirer and the PAC were required to make a public announcement as mandated under the takeover regulations.
"It is noted that the acquisitions in question were by way of inter se transfer of equity shares amongst promoters of the target company," Securities and Exchange Board of India (Sebi) said in the order today.

In addition, Sebi observed that the acquisitions were not done "in a clandestine manner and all the requisite disclosures in that regard were made by acquirer which are available in public domain".

Accordingly, Sebi said that it "do not find blameworthy conduct on the part of the noticees and the alleged breach in this case is technical and minor".
Sebi found that SAL Care Shah Alloys were companies which were promoted and controlled by members by family of Rajendra V Shah.
Further, the acquisitions were made by the acquirer from Rajendra V Shah and at the time of these acquisitions, the sellers were in control of Shah Alloys and held a majority shareholding therein.

The entities had submitted to Sebi that as per provisions in the takeover norms they were eligible for an automatic exemption from making a public announcement.
Noting that the transaction had not resulted in change of control in SAL Steel, the regulator said that "since the acquirer was not disclosed in the shareholding pattern filed by the company...Till December 9, 2011, the acquisitions in question did not qualify for automatic exemption under the takeover regulations".
From December 9, 2011 onwards, SAL Care was shown in the promoter group of SAL Steel.