The Hindu Business Line : SAT pulls up SEBI for lax probe into ACC control

THE Securities Appellate Tribunal (SAT), which has directed SEBI to examine whether Gujarat Ambuja Cement Ltd has gained control of Associated Cement Companies, said that de facto control of a company can exist in many ways and not just by having majority holding.

Criticising SEBI for not making any serious effort to know whether control has been exercised by the Ambujas after acquiring 14.45 per cent Tatas stake in ACC, the SAT order issued on Friday said "it appears that no serious effort was made to find out as to whether control has been exercised in any other manner."

The SAT presiding officer, Mr C. Achuthan, has directed SEBI to properly investigate whether Ambujas acquired control over ACC.

The SAT order said "it is now well recognised that majority holding of shares is not the decisive factor in determining effective control and such control can be had in many ways."

According to legal experts, in case it is legally proved that the Ambujas had control over the ACC, then it will have to make an open offer even tough it has not crossed the 15 per cent limit.

This is as per the Section 12 of the SEBI Takeover Code.

The Ambujas have acquired 14.45 per cent stake from the Tatas in three tranches at Rs 370 per share between December 1999 and September 2000 when the market price was Rs 130 per share.

Mr Achuthan said as far as SEBI's finding that Section 12 is not attracted, "I am of the view that SEBI jumped to the conclusion without properly investigating all the relevant aspects to ascertain as to whether the Ambujas are in a position to effectively exercise control over ACC."

"SEBI has come to the conclusion based solely on the basis of submission made on behalf of the complainant (ACC shareholders), Ambujas, ACC and Tata Group companies," the order said.

Mr Achuthan said this procedure in my view has severe limitation, as the complainant has no access to the records of ACC to bring any material information.

"The proper course for SEBI would have been to investigate the matter independently availing the expertise available at its command."

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