Securities regulator SEBI granted conditional approval to Future Group’s scheme of arrangement and sale of assets to Reliance Industries Ltd.’s retail business on Jan. 20, based on which the Bombay Stock Exchange also granted a “no adverse observation” report to the Rs 27,513-crore deal.
The Securities and Exchange Board of India allowed the deal with some riders, five months after it was announced last August.
SEBI has said the litigation pending before the Delhi High Court and arbitration proceedings by the global e-commerce major Amazon contesting the deal should be specifically disclosed by Future Group while seeking approval for the scheme of arrangement from shareholders or the National Company Law Tribunal, the BSE stated in its observation letter, also dated Jan. 20.
It has also held that SEBI’s go-ahead on the draft scheme of arrangement would be subject to the outcome of these proceedings.
SEBI’s comments on the scheme include;
Shares of the transferee entity issued in lieu of the locked-in shares of the transferor entities are subjected to lock-in for the remaining period post scheme.
Proceedings pending before SEBI against the entities part of the promoter/promoter group or directors of the companies involved in the scheme, should be highlighted in the scheme document filed before NCLT.
Shareholders and NCLT to be provided details of the complaints made by Amazon, submissions by Future Retail Ltd. and all proceedings related to the same, in the Delhi High Court Order, Singapore International Arbitration Centre or any other court.
Future disputes, complaints, regulatory actions or proceedings, or orders involving the scheme should be brought to the notice of shareholders before NCLT approval.
Future Enterprises Ltd. should highlight that 74.2% of its business value post amalgamation of all the group companies is getting transferred to Reliance Retail Ventures Ltd. and Reliance Retail and Fashion Lifestyle Ltd., both of which do not intend to list post the scheme.
Observations of SEBI/stock exchanges be incorporated in the petition to be filed before the NCLT.
Information pertaining to all unlisted Future Group companies involved in the scheme is included in the abridged prospectus.
This development will allow the deal between the two retail entities to proceed, thwarting efforts by Amazon.com Inc. to block the deal. While the American e-commerce company, an investor in Future Group entities, won interim relief from an international emergency arbitrator, a subsequent Delhi High Court order, on a petition filed by Future Group, left it up to the regulators to assess the deal. So far, both Competition Commission of India and SEBI have permitted the merger scheme to proceed.