SEBI (SAST): Preferential Allotment
Querist :
Anonymous
(Querist) 27 May 2011
This query is : Open
Promoter & PAC of the listed company (where in minimum public holding should be 25%) holds 65%.
The Company wants to raise fund for the CAPEX, so convertible warrants would be issued to promoter, so that on the date of conversion Promoter holding would come around 69.20%.
As per SEBI (SAST) under clause 11(2) (i), promoter & PAC could not increase their stake through preferential allotment.
Therefore company is planning to dilute further stake to the non promoter maintaining promoter shareholding at 65% in the same board resolution i.e. allotment to both promoter and non-promoter.
My Query:
a. Is this a valid under the eyes of law?
b. Is this does not trigger open offer as preferential allotment is prohibited above 55% holding?
Yours inputs are solicited?
