The market regulator has no jurisdiction to direct a listed company to adhere to its articles of association, senior counsel Janak Dwarkadas told the Securities Appellate Tribunal on Monday.
Arguing for PNB Housing Finance Ltd., Dwarkadas said appointing a registered valuer to determine the price for its proposed preferential allotment will be in violation of company law provisions.
The housing financier had announced capital raising via a preferential issue on May 31 to certain entities belonging to the Carlyle Group, General Atlantic, Ares SSG, and Salisbury Investments. Currently, government-owned Punjab National Bank owns 32.6% stake in it. The preferential issue would’ve brought PNB’s stake down to 20% and Carlyle Group would’ve become the company’s controlling shareholder with an over 50% majority stake.
For this preferential issue, PNB Housing Finance’s board had arrived at a price of Rs 390 per share. The pricing was determined as per Securities and Exchange Board of India’s ICDR Regulations. But SEBI directed PNB Housing Finance to undertake the valuation of shares as per its articles of association. This had prompted PNB Housing Finance to approach SAT for relief, which had allowed the company to go ahead with the e-voting but not disclose the results.
On July 7, PNB Housing Finance’s board had decided to await the decision of the appellate tribunal even though PNB had asked it to consider restructuring the Rs 4,000-crore fundraising plan.