Amazon has written two letters to Sebi, urging the regulator and stock exchanges not to give their NOCs to the deal since it would mean disregard of Singapore International Arbitration Centre's interim award
MUMBAI: The Securities and Exchange Board of India or Sebi has asked BSE to clarify on the No-objection-Certificate (NOC) given by the exchange to Kishore Biyani-led Future Group for amalgamation of some of its companies as part of the ₹24,713 crore deal, which involves buyout of the group's retail, wholesale and logistics business by Reliance Industries Ltd's retail arm.
Sebi has asked BSE to clarify on the draft composite scheme of arrangement between Future Group companies and Reliance Group companies, which was received by it on 23 October. Scheme of arrangement is a court-approved agreement between a company and its shareholders or creditors.
Six Future Group firms -- Future Consumer Ltd., Future Enterprises Ltd., Future Market Networks Ltd., Future Lifestyle Fashions Ltd., Future Supply Chain Solutions Ltd. and Future Retail Ltd. -- on 7 October had submitted to BSE its draft scheme of arrangement, which essentially involves amalgamation of certain businesses.
BSE has given its NOC for the draft scheme on 6 November, according to a Sebi notification.
This amalgamation is a part of the ₹24,713 crore agreement signed between RIL's Reliance Retail Ventures Ltd and Future Group.
"There are four complaints against Future Group companies and the deal, which are registered under SCORES mechanism of Sebi. Sebi has sought clarification from the designate exchanges on these unresolved SCORES complaints. BSE will seek answers from the companies and send it to Sebi," said a person aware of the matter.
SCORES is an online platform designed to help investors to lodge their complaints, pertaining to securities market, online with Sebi against listed companies and intermediaries. All complaints received by Sebi against listed firms and intermediaries are dealt through SCORES.
Amazon has written two letters to Sebi, urging the regulator and stock exchanges not to give their NOCs to the deal since it would mean disregard of Singapore International Arbitration Centre's interim award, which has restrained Future Group from selling any asset or take any step in this direction until the final arbitration verdict is pronounced by the SIAC.
Amazon has alleged Future Group of misleading public investors through false information and breaching corporate governance norms. Amazon has told SEBI that if the regulator gives an approval to the RIL-Future deal, it will not only mean disrespect for the SIAC but also will be detrimental to the interest of public shareholders and discourage foreign companies from forging any alliance with Indian companies
On 12 November, Mint reported the legal battle between Future Group and Amazon.com Inc. over the former’s ₹24,713 crore deal with RIL is snowballing, with the two litigants adopting the dual strategy of pursuing the case in Indian courts as well as at the Singapore arbitration court.
While Future Retail has filed a lawsuit against Amazon in the Delhi high court to stop it from interfering in the RIL-Future deal, the US retail giant has urged immediate intervention by Sebi in a bid to halt the deal.
The US e-commerce giant accuses Future Retail of breaching takeover norms, misleading investors, disregarding the award of the SIAC and acting against the small shareholders of debt-laden Future Group in order to benefit the group's promoter.
Amazon, in an 8 November letter to Sebi accused FRL of breaching insider trading and takeover regulations.
On 12 November, a Future Group spokesperson said, “Amazon maybe needs some tutorial on the law on insider trading. The Emergency Arbitrator communicated the Interim Order around 6.30 pm (India time) on 25 October 2020. This Interim Order purported to injunct a transaction between us and Reliance. Proprietary and legality demands that in such an event, the counterparty is informed about the development, however infirm the injunction may be. Sebi regulations too are quite clear on this and communication was for a legitimate purpose."
Future Group and Amazon have been blaming each other on various counts with regard to the legitimacy of the Future-RIL deal. The Delhi high court is hearing Amazon on Future Retail’s plea seeking to restrain the US group from approaching Sebi and CCI against the deal.
Future’s contention is that Future Retail and Future Coupons Pvt. Ltd are two separate companies and that Amazon should not interfere in the deal between FRL and RIL.
Future wants to pursue the whole case in two different ways because the deal with Amazon was agreed upon by Future Coupons, while the deal with RIL entails a sale of assets by Future Retail to RIL.
Its case at the Delhi high court is to secure approval for Future Retail to go ahead with the RIL deal.
Simultaneously, both parties have agreed to continue their arbitration battle at SIAC.
This is despite the fact that Future claimed in the Delhi high court and before Sebi that SIAC has no power to adjudicate on the matter and its interim ruling has no efficacy in law.
SIAC on 25 October awarded interim relief in favour of Amazon and restrained Future from selling any retail asset or even seeking any regulatory permission to sell the retail business to RIL.
On 12 August 2019, Amazon had acquired 49% in FCPL, which then acquired a 7.3% stake in FRL. The FCPL agreement states that no transfer of the retail assets of FRL could be effected by FCPL and the promoters without the permission of Amazon.