Corporate governance issues are flying thick and fast in India.
According to various reports, one of the promoters of Pyramid Saimira Theatre Ltd, P.S. Saminathan, has been asked to make an offer to minority shareholders for flouting takeover norms. The news sent the company’s share price soaring in early trades on Monday. But later the company wrote to stock exchanges that it hasn’t received any such order from the Securities Exchange Board of India. As a result, the stock gave up all its gains and in fact ended the day 10% lower.
One of the reports, by the DNA newspaper, said: ”A Pyramid Saimira spokesperson told DNA Money on Saturday the company just received the notification and is looking into the matter.” It’s interesting that the company and this promoter say on Monday that they hadn’t seen the order.
But the bigger issue is that the said order from Sebi hasn’t been sent publicly by the regulator. Journalists at various newspapers got it from market sources. What makes this case all the more suspect is that Monday was supposed to be the day Saminathan was to pick up a 23% stake in the company from a co-promoter. The price at which the deal was to be struck was the lower of Rs 200 and the ruling market price. The fact that the news of the open offer was leaked to the media for publication on this very date raises questions. While Sebi is on the Pyramid Saimira case, it would be worthwhile to get to the root of all this. At the same time, the regulator also needs to do some internal checks to find out how such price sensitive information got leaked, before its public announcement.
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