LAUREL ENERGETICS PVT. LTD. versus SECURITIES AND EXCHANGE BOARD OF INDIA

Citation: [2017] 5 S.C.R. 1005 · Decided: 13-07-2017 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2017] 5 S.C.R. 1005 
LAUREL ENERGETICS PVT. LTD. 
v. 
SECURITIES AND EXCHANGE BOARD OF INDIA 
(Civil Appeal No. 5675 of 2017) 
JULY 13, 2017 
(R; F. NARIMAN AND SANJAY KISHAN KAUL, JJ.( 
SEBI Substantial Acquisition of Shares and Takeover 
Regulations, 2011: Regn. 10 - Interpretation of - Acquisition of 
shares made through inter se transfers amongst promoters - Public 
announcement - Open offer made for acquisition of equity shares 
of the Target Company from the equity shareholders of the Target 
Company at the price of Rs.3.20 per share - Exemption provisions 
A 
B 
c 
in Regn. 10, applicability of - SEBI held that tl2e exemption 
provisions in Regn. l 0 would not apply to 2014 acquisition, as a 
result of which the price of Rs.3.20 per share was not accepted and D 
the higher price of Rs.6.30 would have to be paid to equity 
shareholders of the Target Company - In appeal, the appellate 
tribunal held that -Regn. JO did not exempt the acquisitions of 2014, 
as a result of which the price payable per share necessarily became 
Rs.6.30 instead of Rs.3.20 per share - Interference with - Held: 
Not called for - For application of exemption under Regn. 10, 
persons must be promoters of the target Company for not less than 
three years prior to the proposed acquisition - On facts, the 
information memorandum having been filed on 191" July, 2012 
pursuant to which listing took place one day later and three years 
did not elapse on 91101" July, 2014, the date on which the earlier 
purchase of shares took place. 
Company laws: Lifting of the corporate veil - Under Regn. 
10, in certain specified circumstances - Explained- SEBI Substantial 
Acquisition of Shares and Takeover Regulations, 2011. 
E 
F 
Dismissing the appeals, the Court 
G 
HELD: 1.1 On a plain reading of Regulation 10 of the SEBI 
Substantial Acquisition of Shares and Takeover Regulations, 2011, 
it is clear that persons must be named as promoters in the 
shareholding pattern filed by the "Target Company". The Target 
1005 
H 
1006 
A 
B 
c 
D 
E 
F 
SUPREME COURT REPORTS 
[2017] 5 S.C.R. 
Company is separately defined by the 2011 Regulations in 
paragraph 2(z). The Target Company means a company whose 
shares are listed on a Stock Exchange. On facts, shares of 'R' 
Company, were listed on the two Stock Exchanges. It is clear 
from Regulation 10 that persons named as promoters in the 
shareholding pattern filed by the 'R' Company in terms of the 
listing agreement between the two Stock Exchanges is what is to 
be looked at. And for this purpose persons must be promoters of 
the 'R' Company for not less than three years prior to the proposed 
acquisition in order that the exemption under Regulation 10 would 
apply. On facts, the information memorandum having been filed 
on 19'" July, 2012 pursuant to which listing took place one day 
later, is the relevant date from which this period is computed. 
This being the case, three years had not elapsed on 9/lO'h July, 
2014, which was the date on which the earlier purchase of shares 
had taken place. [Paras 11, 121 [1012-C, E-GI 
1.2 It is seen in some of the other clauses contained in 
Regulation 10 that the corporate veil is lifted in certain specified 
circumstances. A reading of Regulation 10 (iii) would show that 
holding companies and their subsidiaries are treated as one group 
subject to control over such companies being exclusively held 
by the same persons. This shows that it has been statutorily 
recognized in sub regulation (iii) that in a given situation viz 
holding subsidiary relationship, the corporate veil would be lifted. 
It is clear that sub regulations (iv) and (v) follow the pattern 
contained in sub regulation (ii) in as much as when it comes to 
persons acting in concert, the period should be not less than 
three years prior to the proposed acquisition, and disclosed as 
such pursuant to filings under the listing agreement. Also, when 
it comes to shareholders of a target company who have been 
persons acting in concert for a period of not less than three years 
prior to the proposed acquisition and are disclosed as such 
pursuant to filings under the listing agreement, the corporate 
G veil is not lifted. The difference between sub regulations (ii), (iv) 
and (v) on the one hand, and sub regulation (iii) on the other, 
again shows that it is impermissible for the court to lift the 
corporate veil, either partially or otherwise, in a manner that would 
distort the plain language of the regulat

Excerpt shown. Read the full judgment & AI analysis in Lexace.