The Securities and Exchange Board of India (SEBI), which regulates India’s stock market, has directed Religare Enterprises Limited (REL) to apply for necessary approvals by July 12th for an open offer by the Burman family. An open offer is a process where an entity (the acquirer) who already owns a significant stake in a company (the target) makes a public offer to buy additional shares from existing public shareholders.
This directive comes after allegations by the Burman family that the Religare board, led by Chairperson Rashmi Saluja, was obstructing their open offer. Saluja, on the other hand, had raised concerns about the Burman family’s eligibility to acquire Religare.
SEBI’s intervention aims to ensure a fair and transparent process for Religare’s public shareholders. The market regulator highlighted that shareholders have the right to decide whether to sell their shares in an open offer, and this right shouldn’t be hindered by the target company’s management, especially in situations where there’s a potential conflict of interest.
What Does This Mean for Religare and the Burman Family?
SEBI has directed Religare to seek approvals from three regulatory bodies:
- Reserve Bank of India (RBI): As Religare has a non-banking financial arm, RBI approval is required.
- Insurance Regulatory and Development Authority of India (IRDAI): Religare also has an insurance unit, necessitating IRDAI’s nod.
- SEBI: SEBI’s own approval is needed for the open offer process.
Religare will need to submit the applications by July 12th. Once approvals are obtained, the Burman family can proceed with the open offer, allowing existing public shareholders of Religare to decide if they want to sell their shares at the offered price.
Impact on Religare’s Stock Price
Following SEBI’s directive, Religare’s share price witnessed a rise, indicating that investors might perceive the open offer positively. However, the final outcome will depend on the price offered by the Burman family and the decisions made by public shareholders.