Order in respect of Fairfield Atlas Limited

WTM/PS/46/CFD/SEPT/2013 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 Fairfield Atlas Limited

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had passed an interim order dated June 04, 2013 (hereinafter referred to as "the interim order ") with respect to 105 listed companies who failed to comply with the Minimum Public Shareholding ("MPS") norms as stipulated under rules 19(2)(b) and 19(A) 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. Fairfield Atlas Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The equity shares of the Company are listed on the Bombay Stock Exchange Limited ("BSE"). 3. The Company filed its replies to the interim order vide letters dated June 06, 2013 and June 10, 2013. In the said replies, the Company inter alia submitted that its promoter (T-H Licensing Inc.) made a public announcement on May 07, 2013, in terms of regulation 10 of the SEBI (Delisting of Equity Shares) Regulations, 2009 ("the Delisting Regulations"), to purchase 43,95,744 equity shares (representing 16.09% of the issued and paid-up share capital) held by the public shareholders of the Company and to voluntarily delist the equity shares of the Company from BSE, in accordance with the provisions of the Delisting Regulations, subject to the successful completion of the delisting offer.

It was also submitted that a total of 29,79,230 equity shares have been tendered by the public shareholders and that the final offer price of 245/-determined under the Delisting Regulations was also accepted by the promoter. According to the Company, the promoter has made payments on or before June 10, 2013 to acquire 26,84,650 shares validly tendered by the public shareholders at or below the exit price. The Company also stated that it has made an application to BSE for seeking final approval to delist the equity shares. 4. An opportunity of personal hearing was afforded to the Company on July 17, 2013, when Mr. Marcel Rebello (Compliance Officer of the Company), Mr. Sanjay Asher, Advocate appeared and made submissions. Ms. Paulomi Mehta and Mr. Jimit Shah from M/s. Crawford Bayley & Co., were also present. During the personal hearing, the representatives stated that the delisting process was started on February 26, 2013 and that BSE gave its in-principle approval on April 30, 2013. It was also submitted that in case the delisting was not successful, paper work was kept ready for an Offer for Sale ("OFS"), as a back-up plan, in order to comply with the MPS norms.

As the Company was non-compliant with the MPS norms as on June 03, 2013 (the due date for such compliance) and as the delisting process was not completed on or before the said due date (as the promoter had admittedly made payments on or before June 10, 2013 to those public shareholders who had tendered shares in the delisting offer), I had asked the representatives as to why there was a delay in completing the delisting process. To this question, the representatives stated that it took time for completing the documentation work with respect to the delisting process and that the in-principle approval from BSE came after 7 days than what they had expected. 5. During the hearing, the representatives were advised to show the documents which prove that funds were debited from the escrow account on account of the payments made to the public shareholders against shares tendered by them and the credit of those shares into the demat account of the promoter. However, the representatives were not able to show me the escrow bank account statement and the promoter's demat account statement during the personal hearing.

Therefore, I had advised the Company to submit such documents along with written submissions, if any. 6. Thereafter, the Company filed its written submissions vide letter dated August 05, 2013 enclosing certain documents including certificate/letter dated June 07, 2013 from the Deutsche Equities India Private Limited (the manager to the delisting offer), account statement of the escrow bank account opened with respect to the delisting offer and the transaction statement of the delisting escrow demat account. In the written submissions, it was inter alia submitted that - (i) the promoter accepted the exit price on June 01, 2013 and on the same day a post-offer public announcement was made in terms of regulation 18(1) of the Delisting Regulations; (ii) the monies lying in the escrow account maintained by the promoter with Deutsche Bank AG being a sum of 65,77,39,250/- was sufficient to pay all the public shareholders who validly tendered their shares in the delisting offer; (iii) the manager to the offer has confirmed that all shareholders whose shares were accepted in the reverse book building process have been paid on or before June 07, 2013 and that all the equity shares which were not accepted were returned to the respective public shareholders; (iv) the Company and its promoter have taken all necessary steps in order to delist the equity shares of the Company from BSE in an efficient and timely manner, and that there are no further steps that the Company need to undertake in order to comply with the MPS requirement; and (v) the Company had not jeopardised the interest of its investors in the entire delisting process.

7. Subsequently, the Company, through its advocate, forwarded additional submissions vide letter dated August 13, 2013. In the said submissions, it was stated that the remaining public shareholders holding an aggregate of 17,11,094 equity shares have the right to tender their respective equity shares to the promoter up to a period of atleast one year from the date of delisting and in such case, the promoter shall accept those shares which are tendered at the exit price (at 245/- per share). It was further submitted that the promoter has already deposited a sum of 41,92,18,030/- into the escrow account, being the consideration payable for acquiring 17,11,094 equity shares during the exit period in terms of regulation 21 of the Delisting Regulations. An extract of the statement of the escrow bank account was annexed to the aforesaid letter. 8. Although the Company was advised during the personal hearing to provide the demat statement of the promoter, the same was not filed. Thereafter, on reminder from SEBI, the Company vide letter dated August 27, 2013 forwarded a copy of the statement of holdings in demat as at July 29, 2013 of T.H.

Licensing Inc., the promoter of the Company. The Company submitted that the promoter was holding 2,56,09,446 equity shares aggregating to 93.73% of the total paid-up share capital of the Company which included the 26,77,250 equity shares transferred from the delisting escrow account. Subsequently, vide an electronic mail dated August 31, 2013, the advocates for the Company forwarded a copy of the transaction statement as at August 30, 2013 of the demat account of the Company's promoter. In the e-mail, the Company requested SEBI to afford another opportunity of personal hearing before any action as contemplated in paragraph 18 of the interim order is initiated against the Company, its promoters and directors. 9. I have considered the replies/submissions of the Company, the oral submissions made during the personal hearing and the documents submitted by the Company. 10. The case of the Company is that it had taken steps for delisting its equity shares pursuant to a proposal from its promoter to acquire the equity shares held by the public shareholders and to delist the equity shares. According to the Company, the reverse book building process commenced on May 22, 2013 and closed on May 27, 2013. A total of 29,79,230 equity shares were tendered by the public shareholders out of the total offer size of 43,95,744 equity shares.

The promoter accepted the exit price of 245/- and also made a post offer public announcement on June 01, 2013, in terms of regulation 18(i) of the Delisting Regulations. 11. I have perused the relevant documents submitted by the Company. I have also perused the escrow bank account statement [Escrow Account – TH Licensing Inc – Delisting Offer" with Account Number - 0645879000] and note that an amount of 59,70,73,908/- was deposited therein as of May 03, 2013. Further, as per the letter dated June 07, 2013, Deutsche Equities India Private Limited has confirmed the completion of settlement and certified that within 10 days of the closure of the bid period, all shareholders whose shares have been accepted in the reverse book building process have been paid and that all equity shares which were not accepted have been returned to the respective public shareholders. 12. I have also perused the transaction statement of the Fairfield Atlas Ltd-Delisting Escrow Account and note that there have been credit of shares from May 15, 2013 till May 27, 2013, which aggregated to 29,50,935 shares. Thereafter, from June 05, 2013 there have been a debit of shares from the said demat account (appears to be the return of invalid shares in the delisting offer) and that as on June 12, 2013, an aggregate of 26,77,250 shares (in demat mode) remained in the escrow demat account.

I have also perused the transaction statement of the demat account of the promoter and note that valid shares (26,77,250 shares) in demat mode tendered in the delisting offer were transferred to the demat account of the Company's promoter. 13. I note that in the delisting offer, 26,77,250 shares were validly tendered in demat mode and 7,400 shares were tendered in physical mode. The escrow bank account has a balance of 41,92,18,030/- as on June 03, 2013, which is sufficient to make payments for the remaining 17,11,094 equity shares that could be tendered during the exit period considering the exit price of 245/- per share. 14. From the above facts, I note that only on June 07, 2013, the process of making payments to all those shareholders whose shares were accepted in the reverse book building were completed and that the equity shares which were not accepted in the delisting offer were returned to the respective public shareholders. In this regard, I would like to observe that delisting is a long process involving various steps and unforeseen delays could jeopardise the process. Ideally, the Company should have started its delisting process well in advance so that the final step would have been completed before June 03, 2013. In this regard, it is important to note that the Company was under a notice for three years to achieve compliance with the MPS norms.

However, considering the fact that the Company has taken steps towards delisting and also as the delisting offer was successful, I am of the opinion that the directions issued against the Company, its directors, promoters and promoter group, vide the interim order need not be continued. I am also of the opinion that this case does not warrant initiation of further action as contemplated in paragraph 18 of the interim order. In view of the above observations, the request made by the Company (vide e-mail dated August 31, 2013) for another opportunity of personal hearing would not be necessary. 15. For the above reasons, 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 issued vide the interim order dated June 04, 2013 against the company, Fairfield Atlas Limited, its directors, promoters and promoter group, with immediate effect. The aforesaid direction would enable the Company's promoter, T-H Licensing Inc. to proceed and accept the shares tendered by the remaining public shareholders during the exit period in the delisting process and to make payments to such public shareholders against the shares so offered therein.

16. Copy of this Order shall be served on the stock exchanges and depositories for their information and necessary action.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : 30th SEPTEMBER, 2013 Place : Mumbai