Order in the matter of Hira Automobiles Limited

ORDER Under sections 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 Hira Automobiles 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 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. Hira Automobiles 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"), the Delhi Stock Exchange Limited ("DSE"), the Ludhiana Stock Exchange Limited ("LSE") and the Ahmedabad Stock Exchange Limited ("ASE").

3. The Company filed its replies to the interim order vide letters dated June 24, 2013 and July 16, 2013, wherein the following submissions were inter alia made : (i) The Company's promoter, Mr. Rahulinder Singh Sidhu had expressed his intention, vide letter dated May 25, 2013, of acquiring the remaining 1,17,730 equity shares i.e., 4.28% of the total shareholding held by the public shareholders and to delist the shares from the stock exchanges in accordance with Chapter VII of the SEBI (Delisting of Equity Shares) Regulations, 2009 ("the Delisting Regulations"). (ii) The Board of Directors had passed a resolution on May 28, 2013 authorising the delisting of shares.

(iii) Thereafter, the postal ballot process for seeking approval from the public shareholders of the Company for delisting of shares has been successfully completed as the scrutinizer had reported that the resolution has been passed through 100% consent of the shareholders. (iv) On receipt of the scrutinizer's report, the Company had published the results of the postal ballot in the newspapers on July 05, 2013. (v) The delisting process had come to a halt as its promoters has also been debarred from dealing in the securities market, vide the interim order. (vi) The Company requested SEBI to take into consideration the special facts and circumstances of its case and the reasons, which were beyond its control, in complying with the MPS requirements.

In view of the submissions, the Company therefore requested SEBI to revoke the interim directions and allow it to complete its delisting process which is already initiated, allowing its promoter, Mr. Rahulinder Singh Sidhu to buy shares of the Company from the public for the limited purpose of acquiring shares in the delisting process.

4. An opportunity of personal hearing was afforded to the Company on October 28, 2013, when Mr. Ravinder Kumar (Practising Company Secretary), Mr. Kulwinder Singh (Manager, Accounts) and Mr. Mohit Baser [Manager, Hem Securities Limited (the merchant banker)] appeared and made submissions. While reiterating the submissions made in the Company's replies, the representatives submitted that Hem Securities Limited was already engaged by the Company as the merchant banker in the delisting process. It was also stated that as per the 'BSE Check List' with respect to the delisting process, approvals/consent from regional stock exchanges have to be obtained and that the Company expects that the same would be completed in a week or two. It was submitted that on receipt of such documents, the Company would seek the in-principle approval of BSE with respect to its delisting proposal and then on receipt of the approval would proceed to comply with the procedure laid down in Chapter VII ("Special Provisions for Small Companies and Delisting by Operation of Law") of the Delisting Regulations. The representatives reiterated their request to SEBI for permitting the promoter to buy shares from the public shareholders during the delisting process. In view of the time involved in meeting with specific activities in relation to the delisting process, the representative also requested SEBI to grant atleast a period of 5 months to complete the delisting process.

5. I have considered the submissions made by the Company vide its replies and the oral submissions made during the personal hearing and other material available on record. The shareholding of the promoter and promoter group in the Company is at 95.72% and the public shareholders hold 4.28%. The Company's promoter desired to acquire the shares (4.28% of the total equity) held by the public shareholders of the Company and to delist the shares of the Company. According to the Company, it proposes to delist the shares of the Company in terms of Chapter VII of the Delisting Regulations.

6. Considering the facts such as (i) the intention of the promoter to acquire the remaining shares held by the public shareholders and to delist the shares of the Company; (ii) the approval of the board of directors with respect to such proposal for delisting; (iii) the approval of shareholders through postal ballot favouring the proposal for delisting; (iv) the submission that the Company's promoter had engaged a merchant banker in its offer for delisting; and (v) the submission that the Company would file an application for seeking in-principle approval from BSE on receipt of 'no-objection' from the regional stock exchanges where the Company's shares are also listed, I am of the view that the Company may be permitted to delist its shares in accordance with the applicable provisions of the Delisting Regulations. The Company has also submitted that the directions passed vide the interim order has restricted the Company's promoter from moving ahead with his acquisition of shares in the delisting process and requested SEBI to modify the interim order so as to enable the Company/its promoter to proceed with the delisting process. As the Company has sought for reasonable time for completing its delisting process, I am of the considered view that a period of 5 months be granted to it/its promoter for completing the same.

7. Accordingly, 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 issue the following directions :

(i) The direction issued in paragraph 17(b) of the interim order dated June 04, 2013 stands modified to the extent that it shall not hinder the already commenced voluntary delisting process initiated by the Company and that its promoter, Mr. Raghulinder Singh shall be permitted to buy shares of the Company held by public shareholders in his offer for delisting. (ii) The Company shall endeavour to complete the delisting process within a period of 5 months from the date of this Order, and shall report the outcome of the delisting process to SEBI within a period of one month thereafter. (iii) The direction issued in paragraph 17(b) of the interim order dated June 04, 2013 shall be re-imposed immediately (without the need for passing of a separate order) in case the delisting process of the Company is not completed successfully within the period directed in sub-paragraph (ii) above. (iv) The directions contained in paragraphs 17(a), (c) and (d) of the interim order dated June 04, 2013 shall continue to be in effect till such time the Company is delisted from the stock exchanges or till the time the Company becomes compliant with the MPS norms, whichever is earlier.

8. This Order shall come into force with immediate effect.

9. The aforesaid directions are issued without prejudice to the right of SEBI to initiate action as contemplated in paragraph 18 of the interim order in case the delisting process of the Company is not successful within the period as directed in paragraph 7(ii) above.

10. 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 : November 22nd, 2013 Place : Mumbai