The Securities and Exchange Board of India (SEBI) has ordered Religare Enterprises Ltd to go ahead with Burman’s open offer for Dabur Group. So far the Religare board has been opposing Burman’s takeover attempt through an open offer. In an interim order, Sebi directed REL to submit an undertaking saying it will apply to regulatory authorities, including the RBI, by 12 July 24 for all necessary statutory approvals for the open offer by Burman.
The regulator also directed Religare and its board to show cause why appropriate directions should not be taken, including directions to prevent them from entering the securities market. SEBI asked REL to submit an undertaking on the open offer within seven days.
SEBI approved the interim direction issued against JM Financial
Apart from this, SEBI has asked REL to constitute a committee of independent directors as per Regulation 26(6) of SAST Regulations, 2011 if not already constituted. Sebi said the acquirer (Burman) is willing to fulfill its obligation to acquire the shares through an open offer, but REL is thwarting its efforts to do so.
According to SEBI, REL and its committee of independent directors submitted through letters dated June 10 and 11 that SEBI’s letter advising REL to apply to RBI, IRDAI and SEBI was improper and outside jurisdiction. This resulted in regulatory overreach, as it conflicted with the powers of REL’s board of directors and the exercise of regulatory discretion by other regulators. REL said the issue of “fit and proper person” criteria and approval for change of control was not examined or dealt with by SEBI and was properly left for the consideration of the regional regulators concerned.
Burman tried to get RBI approval for change in control/management of REL. However, SEBI said, “RBI did not consider their application on the basis that only the target company (RIL) is permitted to make such application in the Master Circular dated October 19, 2023 issued by RBI.”
Responding to SEBI’s order, a Religare spokesperson said, “As advised by SEBI, the company will apply to the relevant regulators, including RBI, for proper and proper status of the acquirers for the open offer.”
Burman holds 21.54 per cent stake in REL
Burman held 21.54 percent shares of REL. On September 25, 2023, it bought a 5.27 percent stake at a price not exceeding Rs 235 per equity share. Burman Rs. 235 for a total of Rs. 2,115 crore representing a 26 percent share of Rs. 10 made an open offer to buy 9 crore equity shares of face value.