SAT DISMISSES GILLETTES PLEA ON HOLDING NORMS The Securities Appellate Tribunal (SAT) on Wednesday dismissed Gillettes appeal against Sebi for alleged violation of the market regulators minimum public shareholding norm. The tribunal also vacated the interim relief granted earlier to the company on May 30, this year. The maker of mens grooming products, Gillette India had sought to meet the 25% minimum public shareholding threshold by reclassifying its promoter shareholding as non-promoter shareholding. However, its proposal was rejected by Sebi, which felt the route was intended to circumvent the guidelines and was not in line with the spirit of the norms. Sebi had argued that Gillettes proposal did not talk about offering shares to the public and would not create the dispersed shareholding structure essential to providing liquidity to the investors and discover the fair price. On Wednesday, while passing the order, SAT member Jog Singh termed the proposal a contentious and circuitous method, which is against the spirit of the law. The tribunal further said that the appellant seems to have overlooked, whether deliberately or inadvertently, the fact that the underlying philosophy behind the requirement of a minimum public holding of 25% is prevention of concentration of shares in the hands of a few market players by ensuring a sound and healthy public float to stave off any manipulation or perpetration of other unethical activities in the securities market, which would unfortunately be the irrefragable consequences of the reins of the market being in the hands of a few. The tribunal also pulled up Gillette India for the delay in achieving the minimum public shareholding, saying that the company waited till the fag end of the window period of three years provided to listed companies to ensure adherence with the regulation. We are looking into the order in detail, and remain committed to complying with the new law and engaging with Sebi to achieve compliance with the minimum 25% public shareholding requirement norm, said a Procter & Gamble spokesperson, responding to specific queries. P&G is the worlds largest consumer goods company which now owns Gillette India. This order upholds stronger corporate governance principles and is a signal to India Inc and MNCs that the regulations apply to all equally, says Akil Hirani, managing partner, Majmudar & Partners. The Gillette promoters hold 88.76% in the company, according to exchange filings. According to the three-tiered formula of the company, the Indian promoters (SK Poddar Group) would transfer a 4% stake to parent company P&G at a 25% premium for giving up control and certain statutory rights. Then the shareholder agreement between P&G and Poddar Group would be terminated. And finally, P&G would sell 4.9% through OFS to bring down the total promoter holding to 75%. According to the arguments of Gillette Indias counsels in the tribunal, Sebi has ignored similar cases of reclassification by other companies like Gokaldas Exports and Capital First (formerly Future Capital). In response to these claims, SAT had earlier observed that Sebi should examine the shareholding patterns of the relevant entities.
Posted on: Thu, 04 Jul 2013 12:26:44 +0000
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