In the matter of Omaxe Limited- minimum public shareholding requirement

WTM/PS/69/CFD/JAN/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM : PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under Section 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with Section 12A of the Securities Contracts (Regulation) Act, 1956 in the matter of non-compliance with the requirement of minimum public shareholding by listed companies In respect of Omaxe Limited 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') passed an interim order dated June 04, 2013 (hereinafter referred to as 'the interim order') with respect to 105 listed companies who did not comply with the Minimum Public Shareholding ('MPS') norms as stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as 'SCRR') within the due date i.e., June 03, 2013. The interim order was passed without prejudice to the right of SEBI to take any other action, against the non-compliant companies, their promoters and/ or directors or issuing such directions in accordance with law. The interim order was to be treated as a show cause notice by those companies for action contemplated in paragraph 18 thereof.

2. Omaxe Limited (hereinafter referred to as 'the Company') is one such company against whom the interim order was passed. The public shareholding in the Company on the date of the interim order was 12.81%. The shares of the Company are listed on the Bombay Stock Exchange Limited ('BSE') and the National Stock Exchange of India Limited ('NSE').

3. The Company filed its replies dated June 21, 2013, August 07, 2013, October 04, 2013, October 30, 2013 and November 14, 2013 to the interim order. Thereafter, an opportunity of personal hearing was afforded to the Company on December 18, 2013, when Mr. Sudhangshu Biswal, President (Corporate Finance) and Mr. Abhijit Diwan, General Manager (Equity and Investor Relations) of the Company appeared along with Mr. Sanjay Asher, Advocate and Mr. Ankit Paleja, Senior Associate of Crawford Bayley & Co. and made oral submissions. During the personal hearing, the representatives submitted that the Company is now compliant with the MPS norms and requested SEBI to withdraw the directions issued in paragraph 17 of the interim order. The submissions of the Company inter alia are as follows:

a. It had taken various steps to meet the requirements of MPS. To start with, the promoters and the members of the promoter group had undertaken an Offer for Sale ('OFS') on May 21, 2013 (Tranche 1), for an aggregate of up to 50,00,000 equity shares of face value of 10 each constituting 2.88% of the total paid up equity share capital of the Company. At the close of the Tranche 1 offer, out of the 50,00,000 equity shares offered only 33,98,385 equity shares were subscribed. b. Thereafter, the Company requested for certain relaxations/ permissions from SEBI. On receiving such permissions, the promoters and the members of the promoter group had undertaken an OFS on June 03, 2013 (Tranche 2), for an aggregate of up to 2,11,60,000 equity shares of face value of 10 each constituting 12.19% of the total paid up equity share capital of the Company. At the close of the Tranche 2 offer, out of 2,11,60,000 equity shares offered only 59,02,454 equity shares were subscribed and the promoters' share holding reduced to 83.79%. c. After this, the promoters and the members of the promoter group had undertaken a third round of OFS on September 27, 2013 (Tranche 3), for an aggregate of up to 1,52,50,000 equity shares of face value of 10 each representing 8.79% of the total paid up equity share capital of the Company.

At the close of the Tranche 3 offer, out of 1,52,50,000 equity shares only 42,30,510 equity shares were purchased and the promoters share holding reduced to 81.35%. d. The promoters and the members of the promoter group had undertaken another OFS on October 29, 2013 (Tranche 4), for an aggregate of up to 1,10,20,000 equity shares of face value of 10 each representing 6.35% of the total paid up equity share capital of the Company. At the close of the Tranche 4 offer, out of 1,10,20,000 equity shares only 40,27,993 equity shares were purchased and the promoters share holding reduced to 79.03%. e. The Board of Directors of the Company in a meeting dated October 30, 2013, deliberated upon the efforts made for compliance and the response for the various OFS made during the last few months. The Board in order to meet the shortfall of 4.03%, decided to proceed with issue of bonus shares to the public shareholder, where the promoter and promoter group entities had already foregone their entitlement. f. Accordingly, the Company immediately took requisite steps and completed the allotment of shares to the eligible shareholders.

The Company has received the listing and trading permissions from NSE and BSE for such bonus shares on November 14, 2013. Post allotment, the shareholding of the Promoters in the Company is at 74.99%.

g. The number of shares traded on the stock exchanges in the year 2013, have been higher than the number of shares traded in the year 2012, 2011, 2010 and 2008. This shows that the liquidity and the volume of shares of the Company did not have a negative impact even though the Company was not fully compliant with the MPS. The prices of the shares of the Company could therefore not be susceptible to manipulation by the promoters.

4. I have considered the reply and the submissions made by the Company. The Company has submitted that it had examined various methods to comply with the MPS norms. It has also been submitted that due to the negative stock market sentiments towards the 'Real Estate and Infrastructure' Sector in the past couple of years, it has been very difficult for companies operating in such sectors to raise funds either through the primary or the secondary route. I note that in order to comply with the MPS requirements the Company had undertaken a series of OFS on four dates. However, it could not comply with the MPS norms.

5. I note that the Company has now achieved the compliance through a combination of OFS and bonus shares. The Company has received the listing and trading permissions from NSE and BSE on November 14, 2013, w.r.t the shares issued under bonus issue. The public shareholders now hold 25.01% in the Company. From the aforesaid discussion, it is clear that the Company did not comply with the MPS requirements on or before June 03, 2013, i.e., the prescribed due date. I note that the promoters had come out with the first OFS on May 21, 2013, to achieve compliance. The Company vide its letters has provided detailed explanation for the delay. Having gone through the same, I note that the Company had started taking effective steps for compliance only from May, 2013. If it had taken those steps much earlier, it could have avoided the delay in complying with the MPS. The Company has definitely delayed its compliance with the MPS requirement when it was under notice for three years for such compliance. The conduct of the Company indicates to me that it was not serious in complying with the MPS norms well within the due date. Therefore, the Company is warned for its conduct and is advised to ensure compliance with all the applicable laws and regulations administered by SEBI, in letter and spirit. However, considering the fact that the Company has now complied with the MPS norms, though belatedly, as observed above, I do not propose to initiate further action against the Company as contemplated in paragraph 18 of the interim order.

6. With the above observations, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(2)(j), 11(4) and 11B thereof and Section 12A of the Securities Contracts (Regulation) Act, 1956, hereby revoke the directions vide the interim order dated June 04, 2013 against the Company, Omaxe Limited, its directors, promoters and promoter group, with immediate effect.

7. Copy of this Order shall be served on the stock exchanges and depositories for their information and action that may deem fit and necessary in this case.

PLACE: Mumbai PRASHANT SARAN DATE: January 10th, 2014 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA