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PNB Housing Finance moves SAT against SEBI order: Experts discuss

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PNB Housing Finance has challenged the SEBI’s order in Securities Appellate Tribunal (SAT) and goes ahead with the EGM on June 22. JN Gupta, MD of Stakeholders Empowerment Services (SES) as well as Shailesh Haribhakti of SH Associates discussed this further.

The capital market regulator Securities & Exchange Board of India (SEBI) has stalled the deal between PNB Housing Finance and Carlyle on grounds of violation of articles of association provisions which was first highlighted by the proxy advisory firm SES.
PNB Housing Finance has challenged the SEBI’s order in Securities Appellate Tribunal (SAT) and goes ahead with the EGM on June 22. JN Gupta, MD of Stakeholders Empowerment Services (SES) as well as Shailesh Haribhakti of SH Associates discussed this further.
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“The hierarchy of the law both The Companies Act, SEBI Listing Obligations and Disclosure Requirements (LODR) and the Article of Association – as long as article does not have anything contradictory, Companies Act on Issue of Capital and Disclosure Requirements (ICDR) would have prohibited valuation report and article would have said that valuation report is required then it will be in the conflict. There is something additional which is required by article of association which is very much permitted in the law, most of the ICDR or LODR provisions are much more stronger than the companies act themselves there is no conflict,” said Gupta.
In terms of valuing a company, Haribhakti said, “I would follow very strict principles of valuation in valuing any proposition which is as significant as this one. The considerations, which are usually in my mind are to keep the three methods which have been put in motion by the SC’s decision in HUL versus TOMCO would be applied and then appropriate weightage would be placed on it.”
“I am in full agreement with what Mr Gupta is saying. He is making a good point that if you want to be seen to be proper then please follow all the norms which have been laid down under regulation and under law,” Haribhakti added.
For the full interview, watch the accompanying video.

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