SEBI directs Religare to seek regulatory approval for Burman family’s open offer

Markets watchdog Securities and Exchange Board of India (SEBI) has ordered investment company Religate Enterprises Ltd to seek statutory approvals from regulatory authorities regarding an open offer by Dabur India promoter Burman family, before July 12, 2024.

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

The capital markets regulator, in its order issued today, asked Religare Enterprises to apply to the regulatory authorities, including the RBI, on or before July 12, 2024, for all statutory approvals necessary for proceeding with the open offer by the acquirers.

"Noticees 1 to 7 shall take all the necessary steps to facilitate the acquirers to fulfil their obligations under the SAST Regulations, 2011...constitute a committee of the independent directors if not already constituted," the order passed by Ashwani Bhatia, whole-time member, SEBI said.

The company has also been asked to file a reply within 14 days from the date of the receipt of the order. SEBI says Religare can not be allowed to "impinge on the rights of the shareholders and their fate can't be left hanging in balance". The company, it says, even after explicit advice from SEBI refused to take appropriate step for making applications to regulators, and that it's now left with no other option but to issue urgent directions.

The SEBI observations come after the Barman group accused the Religare board and its chairperson Rashmi Saluja of obstructing the 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 apparently 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."

In response to the development, a Religare spokesperson has reportedly said it will comply with the SEBI’s order.

The SEBI order says 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. Prior to 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, says SEBI, the acquirers were obligated to make an open offer to the shareholders. However, the committee of independent directors of Religare raised objections against the open offer, saying the Burman group was not "fit and proper" for the transaction.

The Burman family, which owns FMCG major Dabur India, had also received the Competition Commission of India (CCI) nod to acquire the additional stake in REL through an open market transaction.

On May 31, 2024, too, SEBI asked Religare to seek approvals from the RBI, IRDAI and SEBI for the open offer. However, the company said it had no jurisdiction to intervene in the matter. SEBI says its observations in the order will be considered as a show-cause notice as to why suitable directions including "restraining them from accessing the securities market; prohibiting them from buying, selling or otherwise dealing in securities in any manner whatsoever for a specified period and further restraining them from being associating with any listed company and any registered intermediary, should not be issued against them, for the alleged violations".