Securities Appellate Tribunal: In an appeal filed by Schneider Electric President System Limited (‘French company’), against the SEBI order dated 19-11-2021, wherein it was directed either to list the equity shares of the company on a stock exchange having nationwide terminals or delist the company following the procedure prescribed under the SEBI (Delisting of Equity Shares) Regulations, 2009 within the span of six months, the two-member Bench of Tarun Agarwala J., and Meera Swarup (Technical Member), while dismissing the petition as it was withdrawn by the French Company, directed the company to comply with the SEBI order.
Background
Schneider Electric President System Limited is a public limited company having its equity shares listed on the Bangalore Stock Exchange and Pune Stock Exchange. On 14-02-2017, the company came out with an exit offer of Rs. 200.40 per equity share. On 10-03-2017, 87 shareholders of the company filed the case in the Securities and Exchange Board of India (‘SEBI’), wherein SEBI disposed of the complaint stating that the exit offer of Exclusively Listed Companies (‘ELCs’) was governed by Exclusively listed companies of De-recognized/Non-operational/exited stock exchanges placed in the Dissemination Board (‘DB’) dated 10-10-2016 (2016 Circular) and the Complainants may approach the Company/stock exchange for issues related to valuation.
An appeal was filed against the order at Securities Appellate Tribunal (‘SAT’) by 31 public shareholders holding 9% of the equity capital of the Company. The Tribunal observed certain gaps in the appeal and set aside the order. Further, SAT asked SEBI to pass a reasoned order and to address the issue relating to the stand of SEBI on the need for the ELCs to make a serious effort in continued listing and the procedure and monitoring of their endeavour in listing and/or the exit process when failing to get listed.
On 19-01-2021, two issues arose before SEBI:
a) Was the company ever eligible for listing on a nationwide stock exchange and has the company made any effort to get itself listed on any such exchange?
b) In case the company was eligible to get listed, was it mandatory for the company to get listed prior to exercising the option to get delisted as per the 2016 circular?
On the first issue, SEBI said that the Company was fulfilling the eligibility criteria to get listed on at least one nationwide stock exchange at the time it was moved to the DB. On the second issue, SEBI held that an ELC which was eligible to list on a nationwide stock exchange, cannot unilaterally opt for delisting by taking recourse under the 2016 circular. Such companies can delist only through the process laid down in the Delisting Regulations, and not by availing the relaxations under the 2016 circular.
Further, SEBI ordered Company either to list the equity shares of the company on a stock exchange having nationwide terminals or delist the company following the procedure prescribed under the SEBI (Delisting of Equity Shares) Regulations, 2009 within the span of six months. Also, the shareholders who have tendered their shares in the exit offer should be given an opportunity by the company to buy back the shares tendered in such an offer at the exit price if they choose to.
The Company filed a writ petition in the Bombay High Court against the abovementioned SEBI order and not before SAT,on the ground that the remedy of the appeal might not be efficacious, because SAT already formed an opinion vide order date 26-11-2019, wherein it had sent back the matter to SEBI. To allay the fears of the Company, the Court said that the composition of SAT under Section 15M of the SEBI Act comprises three members, of which two are former judges. Thus, the Appeal would be efficacious. Further, the Court assured that SAT would take decisions without being influenced by its earlier order. Therefore, the High Court disposed of the petition.
SAT Decision
The Tribunal dismissed the appeal against the SEBI order dated 19-01-2021, as it was withdrawn by the French company
Further, it found that the French company had not complied with the order within the period of six months, and as the period has expired, it directed the company to comply with the given directions of the impugned order within the period of six months from the date of this order.
[Schneider Electric President Systems Limited v. SEBI, Appeal No. 144 of 2021, Decided on 26-07-2023]
Advocates who appeared in this case :
Advocates for the Appellant- Senior Advocate Janak Dwarkadas, Advocate Kunal Dwarkadas, Advocate Anusha Jegadeesh, Advocate Trisha Sarkar, Advocate Ambareen Mujawar;
Advocate for the respondent- Senior Advocate Mustafa Doctor, Advocate Manish Chhangani, Advocate Samreen Fatima, Advocate Sumit Yadav, Advocate Abhay Chauhan, Advocate Somasekhar Sundaresan, Advocate Sumit Agrawal, Advocate Amit Agrawal, Advocate Rushin Kapadia, Advocate Radhika Yadav, Advocate Pratham Darad, Advocate Tarun Toprani.
