| 5yr lock-in for RPL promoters' equity : Sebi |
| BS Reporter / Mumbai December 27, 2007 |
| Securities and Exchange Board of India (Sebi) has disposed off a complaint against the initial public offering (IPO) by Anil Ambani-promoted Reliance Power (RPL) by asking the promoters to lock-in the entire 20% of their contribution to the share offer for five years from the date of the IPO. The regulator, however, said the thrust of the argument by the complainant was with respect to shortchanging the shareholders of Reliance Energy (REL) rather than Reliance Power, and hence, the shareholders of REL could take up the matter with the Ministry of Corporate Affairs under whose jurisdiction most of the allegations fall. The Sebi order, say merchant bankers, clears the hurdles ahead of the mega IPO of $2.5-3 billion, which is expected to hit the markets early next year. A complaint filed with the capital markets regulator had alleged serious breach of corporate governance in the case of Reliance Energy, also promoted by Anil Dhirubhai Ambani Group (ADAG), for the transfer of high value projects such as Rosa Power, Sasan Power, Butibori, Shahpur Coal, Dadri etc to a company (RPL), which is owned 50% by Reliance Energy and the remaining 50% by the promoters of REL. The complaint by Rajkot Saher/Jilla Grahak Surakha Mandal had alleged that the proposed IPO by Reliance Power was used by the promoters of RPL to "subvert the spirit" of the rules to gain "huge benefits using several front companies and by means of merger and amalgamation." Sebi, which heard both the parties on December 4, said it has no jurisdiction to initiate action or conclude a finding on this front. While asking the promoters to lock-in their contribution of 20% for a 5-year period, Sebi said: "The objective of mandatory promoters |
