Mumbai: While allowing telecom software services firm Sasken to go ahead with its Rs40-crore buyback offer, Securities Appellate Tribunal (SAT) has said market regulator Sebi has no right to advise a company regarding the price it needs to put for the buyback offer.
“We do not think that Sebi could direct the company to place the buy orders above the market price. As a matter of fact, it is no part of Sebi’s duty to advise a purchaser regarding the price at which he needs to put in his buy orders,” the tribunal said.
SAT gave its ruling after Sasken approached the tribunal on various conditions imposed by Sebi on its public offer which included asking the company to place its buy orders at or above market price.
Sasken’s offer was for buying back equity shares for an aggregate amount of Rs40 crore at a maximum price of Rs260 per share from the open market.
The tribunal said the company has already informed Sebi that the buyback will be from the open market through the stock exchange mechanism, which obviously means that the shares will be purchased at the prevailing price as determined by the system subject to the maximum price of Rs260.
“This being the position, there was hardly a need to tell the company to place its buy orders at the market price,” SAT said.
The tribunal gave the ruling while allowing Sasken to go ahead with its buy-back offer without certain other conditions imposed by the market regulator Sebi.
In April, the board of directors of the company decided to buy-back the shares within 12 months from the date of resolution.
However, Sebi directed the company to start with the offer immediately with its conditions.
The tribunal rejected Sebi’s this direction also.
“When the law allows the company to complete the buyback within 12 months, it has the option to start with the same at any time which it thinks is appropriate for the buyback within the said period,” SAT said.
“The company cannot be compelled to complete the buyback soon after passing of the resolution as has been directed by Sebi,” the tribunal said.
Another objection of Sebi relates to Sasken’s resolution that its board has absolute discretion to close the offer even before it exhausts the outer limit of Rs40-crore offer.
SAT said Sebi misunderstood Rs40 crore as the minimum amount that the company has proposed to buyback, since as per the company resolution it was the maximum amount.
“Sebi has treated the figure of Rs40 crore as the minimum amount, which according to it, the company had necessarily spent as per the public announcement. It is not right as this is contrary to the representation made to the public shareholders,” the tribunal pointed out.
“As such, the market regulator is not right in advising the company to exhaust the limit of Rs40 crore before it closes its buyback offer,” SAT said.
The tribunal said the problem raised by Sebi would not have arisen had it asked the company to tell what is the minimum amount that it would buy back before deciding to close the offer.
As such, it directed Sasken to specify the minimum number of four lakh equity shares which it would buy back before it decides to close the offer.
SAT gave the company two weeks’ time to modify its public announcement for buyback offer.