Sebi orders Religare to seek regulatory approvals for Burman family open offer

New Delhi: Markets watchdog Sebi has ordered non-banking financial company Religare Enterprises (REL) to seek statutory approvals from regulatory authorities for an open offer by Dabur India promoter Burman family before July 12.

The Burman group accused Religare's board and its Chairperson Rashmi Saluja of obstructing the open offer. Meanwhile, Religare argued that the Burman family was not 'fit and proper' to undertake the acquisition.

Markets regulator Sebi said that the NBFC did not show any evidence that the Burman group suffers from such alleged infirmities.

Expressing dissatisfaction over the board's attempt to block the open offer, Sebi in its interim order said that Religare has "acted in an apparently hostile manner".

Sebi has ordered Religare to apply for approval to the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI), and Sebi.

In response to the latest development, Religare spokesperson said, "As per Sebi's advisory the company will apply for the fit and proper status of the acquirers (Burman Group) for the open offer to the concerned regulators including the RBI." In its order, Sebi noted that Burman Group (MB Finmart, Puran Associates, VIC Enterprises and Milky Investment & Trading Company) were public shareholders of Religare Enterprises with 21.54 per cent shares in the company before September 25, 2023.

On September 25, 2023, they placed orders through JM Financial Services Limited to purchase up to 5.27 per cent more shares, which would have increased their total shareholding to over 25 per cent.

This triggered the requirement to make an open offer to all shareholders under Sebi rules. The public announcement of this offer was made on September 25, 2023, stating that they intended to buy up to 26 per cent of the company's expanded voting share capital at Rs 235 per share, totalling Rs 2,115.99 crore.

Following this announcement, the Committee of Independent Directors of Religare raised multiple objections before Sebi, arguing that the Burman Group was not fit and proper to acquire these additional shares. These objections were submitted on various dates between October 18, 2023, and June 11, 2024.

In its order issued on Wednesday, Sebi noted, "The Acquirers (Burman Group) had made public announcement for acquisition of shares on September 25, 2023, i.e. almost 9 months back. While the Acquirers have repeatedly followed up with the Target Company (Religare) to obtain statutory approvals (failing which the open offer cannot proceed), the Target company has steadfastly refused to co-operate and in fact has acted in an apparently hostile manner." Since the open offer obligations of the Acquirers have consequently given rise to shareholders' right to have an exit option, any further delay is likely to cause prejudice to the rights of the shareholders. The Target company cannot be allowed to impinge on the rights of the shareholders and their fate cannot be left hanging in balance, it added.

Accordingly, Sebi has directed Religare, Saluja and other board of directors to "furnish an undertaking that Noticee 1 (Religare) shall apply to the regulatory authorities including RBI on or before July 12, 2024, for all the requisite statutory approvals that are necessary for proceeding with the open offer by the Acquirers".

Before this order, Sebi wrote a letter to Religare on May 31 asking the company to make an application with RBI, IRDAI and Sebi for requisite statutory approvals within 15 days. However, Religare board in a response said that Sebi's letter was unwarranted, without jurisdiction, and was a regulatory over-reach.