Mumbai: The initial public offering (IPO) of Tamil Nadu Mercantile Bank got 83 per cent subscription on the first day of opening on Monday. It received bids for 72,56,228 shares as against 87,12,000 shares on offer after going through a series of legal hurdles in courts with market regulators and tribunals. The quota for retail individual investors was subscribed 1.53 times, while QIBs were subscribed 73 per cent and non-institutional investors 58 per cent.
IPO approved The Securities Appellate Tribunal (SAT) had on September 2 dismissed an appeal by a group of minority shareholders to stay the resolution process.
In its 16-page order that went public on Thursday, SAT gave three grounds for rejecting the appeal of investors of Tamil Nadu Mercantile Bank.
A: No appeal was made to allow them to tender their shares. Two: the exemption from filing a new draft red herring prospectus (DRHP) does not infringe on the legal rights of shareholders; Three: The IPO process is disclosure based and all substantial disclosures have been made.
The case pertains to six foreign investors—Robert & Ardis Gems Company, East River Holdings, Swiss Re Investors (Mauritius), Kamehameha Mauritius, Kuna Group (Mauritius) and FI Investments, in which they approached SAT with a petition for injunction. did. IPO. The common objection of all the shareholders was regarding the company’s decision to withdraw the Offer for Sale (OFS) from the public issue.
In January this year, all these six shareholders had separately filed writ petitions before a division bench of the Bombay High Court. They demanded that the Securities and Exchange Board of India (SEBI) should be directed to accept the DRHP only after allowing the petitioners (shareholders) to participate and tender their shares on a proportionate basis.
SAT in its order said that no such appeal was made before it, hence it is a clear ground for dismissing the appeal. A bench headed by Justice Tarun said, “We are of the opinion that while the writ petition was pending, the appellant was not open to file the present appeal to question the DRHP and its withdrawal by certain shareholders in respect of OFS.” Agarwal.
Further, the tribunal held that shareholders have every right to appeal against the decisions of SEBI only if they are ‘aggrieved’ by the order.
In this case the shareholders had asked to participate in the OFS. However, the bank’s board had completely withdrawn the OFS on May 11. Following which the bank approached SEBI seeking exemption from filing a fresh draft red herring prospectus. SEBI had allowed this in its May 12 order.
SAT in its order said, “In our view, the appellants cannot be aggrieved by the exemption granted by SEBI. No legal right of the appellant has been infringed. There is no injury or legal malpractice to the appellants and therefore, in our opinion, the appellant being not an “aggrieved person” could not have filed an appeal questioning the validity and correctness of the SEBI order.
The Tribunal observed that SEBI follows a disclosure-based framework and requires only accurate and fair disclosure; It does not regulate on merit or approve offer documents like DRHP.
In order to ensure that sufficient disclosures are made in the DRHP to enable investors to make an informed decision, the Bank’s application for withdrawal of OFS without seeking exemption from the strict enforcement of Regulation 300 of the ICDR Regulations has gone. The DRHP was taken into account as per the above provisions under Issuance of Capital and Disclosure Requirements (ICDR).
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