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Investor moves SC against Ruchi Soya, SEBI over preferential share allotment; notice issued

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Kolkata-based investor, Ashav Advisory, has moved the Supreme Court against Ruchi Soya, and Securities and Exchange Board of India (SEBI) over a preferential share allotment dispute. The apex court has issued notices to Ruchi Soya, SEBI, NSE and BSE asking the respondents to submit their replies. The petitioner claims that Ruchi Soya didn't deliver on his pre-COVID commitment of preferential allotment of 1.8 crore shares, which at that time was worth Rs 13 crore but is now worth Rs 1,700 crore.

Investor moves SC against Ruchi Soya, SEBI over preferential share allotment; notice issued

A Kolkata-based investor, Ashav Advisory, has moved the Supreme Court (SC) against Ruchi Soya, the edible oil maker and the Securities and Exchange Board of India (SEBI) over a preferential share allotment dispute.

Taking cognisance of the petition, the apex court issued notices to Ruchi Soya, SEBI, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) asking the respondents to submit their replies.

The petitioner has claimed that Ruchi Soya promised preferential allotment of 1.8 crore shares to Ashav Advisory in February 2020. Back then, the collective price of these shares was Rs 13 crore. Today, it is worth Rs 1,700 crore.

According to Ashav Advisory, the commitment was made at the time when Ruchi Soya was about to be acquired by Patanjali Ayurved through the Insolvency and Bankruptcy Code (IBC) proceedings.

In March 2020, SEBI approved Ruchi's share sale proposal but before the company could go ahead with it, the COVID-19 pandemic broke out and the entire country went into lockdown.

The petitioner and Ruchi Soya agreed that the pandemic delayed the share sale.

The dispute ensued after Ruchi Soya didn't start preferential allotment even 15 days after receiving SEBI's in-principle approval. According to SEBI provisions, a company must start preferential allotment within 15 days of receiving the IPO nod.

When the preferential allotment was not completed, investors got the sense that stock exchanges will condone the delay. However, the stock exchanges asked the company to approach SEBI. At this point, investors and regulators had raised concerns over the situation as Ruchi Soya's share price had already increased by 1,000 percent.

Later in June 2020, the NSE and the BSE advised Ruchi Soya not to go ahead with the preferential allotment as the company was in violation of SEBI rules. Ruchi Soya didn't maintain 25 percent minimum public shareholding as mandated by SEBI norms. In fact, public shareholding was just 1 percent for Ruchi Soya at that time.

In September 2020, SEBI rejected Ruchi Soya's application for relaxation and thus, the company decided not to go ahead with the share sale.

Miffed with the developments, Ashav Advisory moved the Securities Appellate Tribunal (SAT) against SEBI and other parties. The petitioner appealed in the Supreme Court after the SAT gave a verdict in favour of SEBI, Ruchi Soya and other parties.

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