Burmans’ open offer: Religare to comply with SEBI directive, vows to seek statutory approvals

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Religare Enterprises Ltd (REL), currently embroiled in a corporate control battle, said on Thursday that it will comply with the latest SEBI directives to the company’s Board as regards the Burman Family’s open offer. 

REL will now seek statutory approvals for the Burman Family’s Open Offer from regulators, including the RBI, within the specified timelines. 

Takeover code requires a target company to make applications with regulators for statutory approvals of any open offer made by acquirers. 

“As per SEBI’s advisory, the company will apply to the concerned regulators, including the RBI, for the fit and proper status of the acquirers for the open offer,” an REL spokesperson said reacting to the latest SEBI interim order-cum-show cause notice to REL and its board of directors. 

The latest SEBI interim order is a setback for REL Chairperson Rashmi Saluja and the REL Board. Over the past nine months, the Saluja-led REL Board have been engaged in a fierce battle with the Burman family and were allegedly seen as obstructing the acquirers’ efforts to take control of REL.

Meanwhile, reacting to the latest SEBI interim order, a Spokesperson of Burman family said “We remain committed to completing the Open Offer in the interest of public shareholders of Religare Enterprises Limited.”

SEBI’s Interim Order

In an interim order and show cause notice issued on Wednesday, SEBI directed REL and its board of directors to submit an undertaking within seven days. This undertaking must confirm that they will apply to regulatory authorities, including the RBI, by July 12 for statutory approvals to accept the Burman Group’s open offer, SEBI has said. 

Noting that the open offer made by the Burman family requires a logical conclusion, SEBI also directed REL Chairperson Rashmi Saluja and the board to facilitate the acquirers (Burman Group) to fulfil their obligations under the SEBI Takeover Code. It also asked them to immediately constitute a committee of independent directors, as per the code, if one was not in place already. 

SEBI Whole Time Member Ashwini Bhatia has in the order noted that the open offer obligations of the Acquirers (Burman family) had consequently given rise to shareholders’ right to have an exit option and any further delay is likely to cause prejudice to the rights of the shareholders.

“The target company (REL) cannot be allowed to impinge on the rights of the shareholders and their fate cannot be hanging in balance.

However, since the target company, even after explicit advice from SEBI, has refused to take appropriate step for making applications to regulators for statutory approvals, SEBI is left with no other option but to issue urgent directions. The same is necessary for ensuring fair, just and equitable treatment of all the stakeholders, including the Acquirers”, Bhatia said.

SEBI’s earlier advice 

It maybe recalled that SEBI had on May 31 advised REL to make an application within 15 days to RBI, IRDAI and SEBI for requisite statutory approvals, in accordance with the regulatory framework laid down by respective regulators. However, REL Board had in June responded that SEBI’s letter of May 31 was “unwarranted, without jurisdiction and resulted in a regulatory overreach as the same clashed with the powers of Board of Directors of REL” and the matter needed reconsideration. 

This latest SEBI interim order has come as a setback for the REL Chairperson Rashmi Saluja and the REL Board, which have over the last nine months engaged in a fierce battle with Burman family and seen to be allegedly frustrating the efforts of the acquirers.