The Securities and Exchange Board India (SEBI) has initiated adjudication proceedings against Reliance Industries Ltd for alleged violation of takeover norms.
The notice issued by the adjudicating officer on 14 February 2011 says that the issue of 12 crore shares by RIL in the year 2000 to 38 entities related to the promoters of the company violates the norm of creeping acquisition.
According to SEBI, following the allotment of shares the shareholding of RIL promoters and 38 entities termed as persons acting in concert increased by 16.16 per cent from 22.17 per cent as on 31 March 1999 to 38.33 per cent as on 31 March 2000.
Under the takeover rules of Sebi, promoters were allowed to increase their holding in the company by 5 per cent annually.
Since RIL promoters had hiked their stake above the prescribed limit of 5 per cent, they were obliged to make a public announcement under regulation 11 (1) of the SEBI (substantial acquisition of shares & takeover) regulations.
Even though the shares were issued under preferential allotment, which was exempt from the takeover rules, the acquirer was required to file a post acquisition report. But RIL promoters or the related entities neither filed the report nor made any application for exemption from takeover rules.