Investor Drags Rocha Soya, Sebi, Bourses to SC

A little-Known investor has dragged Rocha Soya Industries along with the country’s capital markets regulator and stock exchanges to the Supreme Court to settle a dispute over a preferential allotment in the edible oil maker.

Last week, the apex court issued notices to the Securities and Exchanges Board of India (Sebi), BSE, NSE and Rocha Soya asking them to file response to a petition by Kolkata based Asha Advisory. The investor has claimed that Rocha did not honor its pre-Covid commitment to allot shares of the company which is worth Rs1700 crore today.

Rocha Soya had passed a special resolution in February 2020 for the preferential allotment of Rs 1.8 crore.

This share sale plan came on the heels of the company’s acquisition by Patanjali Aired through the Insolvency and Bankruptcy Code (IBC). As per the September 2021 shareholding pattern, Patanjali owned 98.9% equity in Rocha Soya.

Stock Exchanges had approved Rocha’s share sale proposal late in March 2020. However, a nationwide lockdown was imposed in India due to the Covid-19 outbreak from March 26. Both Rocha Soya and Asha Advisory claim that the imposition of lockdowns delayed the allotment of shares.

The dispute started after the preferential allotment could not be completed within 15 days of receiving in-principal approval, which is required as per Sebi rules.

On April 8, Rocha Soya wrote to exchanges saying the allotment could not be completed on time due to lockdown and sought additional time.

“It started off as a technical delay and the sense was that the stock exchanges will condone the delay. However, instead, they asked the company to approach Sebi for the relaxation,” said a leading securities lawyer who did not wish to be named since the matter is pending with the court.

“The share price by then already rose by 1000% and regulators turned wary of prudential allotment since it was being done at marginal price.’

Email queries to Sebi, BSE and NSE went unanswered till press time.

“With respect to Asha Advisory LLP’s allegations pertaining to the failed preferential allotment of the failed preferential allotment of Rocha Soya Industries Limited, it is clarified that all the allegations and claims of Asha Advisory LLP are found to be baseless and without any merit, by the Securities Appellate Tribunal, Sebi, NSE and BSE on various grounds including applicable Sebi regulations and circulars, and also as the special resolution in favour of the preferential allotment had expired.

According, the claim of Asha Advisory LLP was dismissed,” said Rocha Soya in response to ET queries.

However, the company declined to comment on the current status of the case saying that “the subject matter is now pending adjudication before the Hon’ble Supreme Court’

In June 2020, Rocha received letters from both NSE and BSE advising the company not to go ahead with the preferential allotment since the company was in violation of Sebi rules. Any listed company needs to continuously maintain 25% minimum public shareholding (MPS), however, in Rocha Soya the free-float was just 1%.

“For IBC companies, MPS doesn’t apply but stock exchanges interpreted this capital offering as a normal capital offering by a listed company and that MPS condition needed to be met,” the lawyer cited above added.

In September 2020, Sebi rejected the application of Rocha Soya for relaxation since it hadn’t complied with the MPS norms. Rocha Soya decided not to go ahead with the offering.

Asha, however moved the Securities Appellate Tribunal (SAT) against Sebi and stock exchange. The tribunal ruled in favour of Sebi and stock exchanges. This has now been challenged in the Supreme Court.  S-ET

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