L & T has been stretching/ bending/ ignoring/ violating
the regulations and propriety and getting away with it. All our pleas to SEBI
have fallen on deaf ears. SEBI has not taken any action against L & T. Rather SEBI has taken action
against persons objecting to L & T
takeover of Mindtree. As per the press report Nalanda surrendered and tendered its shares in
the Open Offer because of SEBI notice to them. Nalanda felt threatened that
they will be asked by SEBI to announce an Open Offer as they will be construed
as PAC.
On the one hand SEBI has been trying to stretch its
regulations to brand a person showing common cause with the promoter , as PAC,
yet on the other hand SEBI has been ignoring all the wrong doings of L & T, even when repeatedly pointed out
by us. The impression being created is that SEBI has ignored the interest of
small investors and appears to be playing ball with L & T.
The following questions remain unanswered till date:
1. ATTEMPT
TO BEAT THE REGULATION-- OPEN OFFER IN VIOLATION OF THE TAKEOVER CODE 2011-The SAST 2011 does not allow
voluntary offer by any third party. This is a departure from the earlier 1997
code. As per Regulation 6(1) of SAST 2011, only
persons holding 25% or more can bring a voluntary Open offer.
2. FALSE
DECLARATION IN THE PUBLIC ANNOUNCEMENT—wrongfully stated -this is a mandatory open offer. incorrect to say that “This
Open Offer is a mandatory open offer made in compliance with Regulations 3(1)
and 4”
3. FALSE
AND CONTRADICTORY DECLARATION IN THE PRESS RELEASE- The press release said
“ Immediately
following the filing of the Public Announcement, L & T has placed an order
with its broker for on-market purchase of up to 15% of share capital of
Mindtree at a price not exceeding INR 980 per share”.
This
statement is in contradiction with the statement made in the PA which said
“pursuant to execution of
the SPA and proposal for placing of the Purchase Order”
It
an admitted fact that only a proposal
was there for placing of the purchase order. There was no actual placement of an order. L & T was in no position to place such an order. They have stated the
order could be placed only after receipt of regulatory approvals. An order to the share broker is a
definitive order. An order placed
for a specific number of shares up to a limit price, in this case 2.48 Crs.
Shares, to be bought up to INR 980 will make
the broker buy all the shares available in the market at a price at or below
980 till the desired quantity of 2.48 Crs. Shares is achieved. But this was
never the case. In the Economic Times dated March 28, 2019, experts like Ex.
Director of SEBI Shri JN Gupta and senior advocate Shri Rajesh Begur of ARA Law
this was wrong on the part of L & T-
(a) the order was not actionable and (b) “They don’t need CCI approval to reach
25 per cent,”
4. MALA-FIDE
INTENTION OF L & T.—L&T
acted in a great haste and without fulfilling legal & regulatory
requirements with a mala-fide
intention to pre-empt the Board of MINDTREE who had notified the stock Exchange
on 15-03-2019 that the meeting of the Board of Directors of the Company is
scheduled on 20-03-2019, inter alia, to consider and approve Buyback of equity shares of the Company. L & T
successfully thwarted this meeting and the Board meeting of Mindtree had to be
adjourned. The moment any Public Announcement is made for takeover of any
company, Regulation 26 places several restrictions on the Target company. Under
such circumstances no buy back can be
done without passing a special Resolution.
5. UNWARRANTED
DPS ISSUED ON 26.03.19 in violation of the Regulation—The Detailed Public Statement (DPS)
issued by L&T is totally unwarranted and a misuse of the process of law.
Till date L&T has not purchased from
open market, or even paced a definitive
order on its broker for purchase of shares as was falsely claimed. There is no question of L&T triggering an Open
Offer. Regulation 13(4) specifically
provides that even if PA has been issued but
“the acquirer does not succeed in
acquiring the ability to exercise or direct the exercise of voting rights in,
or control over the target company,” then there is no need to make any DPS. The relevant portion is
extracted below:
Explanation.— It is clarified that in the event the acquirer does not
succeed in acquiring the ability to exercise or direct the exercise of voting
rights in, or control over the target company, the acquirer shall not be
required to make a detailed public statement of an open offer for acquiring
shares under these regulations.
6. MANIPULATION OF RECORD DATE FOR PAYMENT
OF SPECIAL DIVIDEND
On
9th April the company announced the record date (RD)
“The
Record Date for payment of Interim &/ Special Dividend, if approved, will
be April 27, 2019.”
Accordingly the future was trading at a substantial discount
to cash segment. The closing price of the shares on 16.04.19 in cash segment
was 972.50 whereas in the future it was 10 lower. This is understandable
because the Ex date is 25.04.19 which is also the settlement date.
On 17th April 2019 the company has declared that
:
“The
Final Dividend and the Special Dividend are payable subject to the approval of
Shareholders at the Twentieth Annual General Meeting.”
(The complete text of the messages copied from BSE
website are appended below for detailed scrutiny. )
EXTRACTS FROM COMPANY NOTICE
|
Exchange Received Time 09-04-2019 17:10:19 Exchange Disseminated
Time 09-04-2019 17:10:26 Time Taken 00:00:07
|
|
Notice pursuant to Regulation 29 of
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, be
and is hereby given that the meeting of the Board of Directors of the Company
will be held on Wednesday, April 17, 2019, inter alia, to consider the
audited financial results of the Company for the quarter and year ended March
31, 2019, to consider declaration of interim &/ special dividend, if any
and also the recommendation of final dividend, if any, amongst other matters.
The Record Date for payment of Interim &/ Special Dividend, if approved, will be April 27, 2019. |
Exchange Received Time 17/04/2019
13:55:20 Exchange Disseminated Time 17/04/2019 13:55:23 Time Taken 00:00:03
|
MindTree Ltd has informed BSE that
the Board of Directors of the Company at its meeting held on April 17, 2019,
inter alia, has recommended a Final Dividend of 40% (Rs. 4 per equity
share of face value of Rs. 10/- each) for the financial year ended March 31,
2019 and a Special Dividend of 200% (Rs. 20/- per equity share of face value
of Rs. 10/- each) to celebrate the twin achievements of exceeding USD 1
billion annual revenue milestone and 20th anniversary of the Company.
The Final Dividend and the Special Dividend are payable subject to the approval of Shareholders at the Twentieth Annual General Meeting. |
|||||
7. ATTEMPT TO ILLEGALLY DEPRIVE SMALL INVESTORS FOR MORE THAN 100 CRS.
It
is obvious that there is an attempt by L
& T to cheat the minority shareholders of more than Rs.100 Crores ( Rupees
one hundred Crores) Dividend of Rs.20 on
5.13 Crore shares. List of dates :
· 8th July 2019 -The revised
record date for the Special Dividend and Final dividend
· 28.06.19 closing of the offer
· 12.07.19. payment date
· 8.07.19. No ownership can be passed
on to L & T till that date.
· L & T pre-poned the date of
payment in an attempt to enrich themselves with dividend that rightfully
belongs to the small shareholders. L & T cannot be allowed to take
advantage of the dividend and the entire dividend @ 24 ( Special Dividend 20
and Final dividend 4) should be passed on to the shareholders who have tendered the shares.
In their
Letter of Offer also it is specifically mentioned that till the date of the
Letter of offer all rights to dividend etc. will lie with the shareholders tendering the share :
6.1.2 The Equity Shares tendered under this
Offer shall be fully paid-up, free from all liens, charges, equitable interests
and encumbrances and shall be tendered together with all rights attached
thereto, including all rights to
dividends, bonuses and rights offers, if any, declared hereafter, and
the tendering Shareholder shall have obtained all necessary consents for it to
sell the Equity Shares on the foregoing basis.
· MINDTREE has a history of paying Special dividend.
Special dividends in the past were considered as Interim Dividend and paid out
accordingly. In this case also, special dividend was bunched together with
interim Dividend with RD of 27.04.19 but later on the record date was shifted
to 8th July 19.
On 9th April the company
announced:
“The Record Date for payment of Interim &/
Special Dividend, if approved, will be April 27, 2019.”
· The market takes that dividend has
been declared on the day the Board announces the dividend and the record date.
The impact on the price of Future stock is a proof of this. Scrips where
dividend has been declared will be quoted higher in the cash segment and lower
in the Future segment. (except for some unique cases where the dividend is higher
than 5% of the market price and hence adjustable in the Future price.) Same is
the case in MINDTREE.
· It may be argued that technically a
dividend is declared upon approval by shareholders but interim dividend is paid
out without any such approval. For all practical purposes, even a final
dividend is considered to have been declared when it is announced by the Board
and its Record date is announced.
8. OFFER
PRICE CANNOT BE ALLOWED TO BE REVISED LOWER
As
per Regulation 8, the Offer Price cannot be lower than the price at which the
Acquirer has acquired the shares. This price is 980 as per the PA dated 18th
March 2019. At that time the special dividend of Rs.20 was nowhere in sight. In
case the dividend of 20 is not given to the Shareholders who have tendered the
shares, it will tantamount to reduction in the share price by Rs. 20. The
effective Offer price will reduce to 960 only as against the Offer price of
980.
9. OFFER LETTER INDICATES DIVIDEND TO
TENDERING SHAREHOLDERS
Even
the scheduled dates of activity indicate that the shareholders should get the
dividend. The scheduled date of payment (12.07.19) was after the record date
for dividend (08.07.19). L & T would not have been the owner of the shares
and could not have got the dividend. It seems, just to be able to get the
dividend, although in violation of the basic terms of Offer etc. L & T pre-poned the date of payment and
released the payment before the record date.
10. LOSS OF
THOUSANDS OF CRORES IN MARKET CAP AFTER L7T TAKEOVER
Investors
in Mindtree have lost heavily because of L & T taking over the company. The
market price of the company shares have
crashed to 675 from a peak of 1183 resulting in loss of thousands of crores to
the investors.
We pray to you to:
1.
Reply to the above points immediately.
2.
Take appropriate action to protect the
interest of small shareholders and ensure that the special dividend of Rs.20
and the Final dividend of Rs.4 is paid out to them.
3.
To initiate disciplinary action against
L & T for the above violation.
4.
To instruct L & T to complete their committed
purchase order for 2.48 Crore shares.
5.
In case you are not in able to
appreciate our above points, please give us an appealable order so that in case
some of the investors feel extremely distressed, they may escalate the matter
and file appropriate appeals.
