SAT to Religare: Comply with SEBI order, apply for open offer by Burmans

The Securities Appellate Tribunal (SAT) has directed NBFC Religare Enterprises to comply with the Securities and Exchange Board of India’s (SEBI) order. The appellate tribunal has directed the company to seek all the necessary regulatory approvals, as saught by SEBI, for the open offer floated by the Burman family by July 22, 2024.

As a relief, the company has been exempted from any coercive action till August 29, 2024. The market regulator will also file its response on the matter in the next month.

Religare had moved the appellate tribunal after SEBI last month directed it to seek regulatory approval for the Burman family’s open offer. Expressing dissatisfaction over the company's failure to comply with its earlier directions, the regulator asked it to seek all statutory approvals before July 12, 2024.

SEBI said Religare couldn’t be allowed to "impinge on the rights of the shareholders and their fate can't be left hanging in balance". The regulator said even after explicit advice, it refused to take appropriate steps for making applications to regulators, and that now it was left with no other option but to issue urgent directions.

SEBI issued directions against Religare Enterprises, its chairperson and five others, including Malay Kumar Sinha, Hamid Ahmed, Praveen Kumar Tripathi, Ranjan Dwivedi and Preeti Madan.

Earlier, the Barman group accused the Religare board and its chairperson Rashmi Saluja of obstructing its open offer. "The right of the shareholders of the Target Company is sacrosanct and cannot ordinarily be interfered with. The exercise of said right by the shareholders cannot be held hostage to the designs of the existing management of the target company, especially in such cases where the existing management is hostile to the acquirers and faces a conflict of interest in facilitating the acquisition of shares/control by the acquirers in an open offer, due to proposed change in control," SEBI said.

The SEBI order said M.B. Finmart Private Ltd, Puran Associates Private Ltd, VIC Enterprises Private Ltd and Milky Investment & Trading Company are public shareholders of the Burman group. Before the public announcement on September 25, 2023, they held 21.54% shares of Religare Enterprises.

On September 25, 2023, they placed orders with JM Financial Services to purchase up to 1,73,15,874 equity shares (i.e. 5.27% of the equity share capital), at ₹235 per equity share. This would have increased their shareholding in the company beyond 25%. As a result of this, said SEBI, the acquirers were obligated to make an open offer to the shareholders. However, the committee of independent directors of Religare raised objections, saying the Burman group was not "fit and proper" for the transaction.

Religate has, meanwhile, has informed that ratings agency Care Ratings has reaffirmed the rating of CARE BB+ with the revised outlook from 'Negative' to 'Stable' to the long-term bank facilities of Rs 500 crores of Religare Housing Development Finance Corporation Limited (“RHDFCL”), step down subsidiary company of Religare Enterprises.