Synopsis
Religare Enterprises has withdrawn its appeal at the NCLAT regarding the CCI's decision, which allowed the Burman family to acquire a significant stake in the company. This decision solidifies the Burman family's control over Religare, marking a significant shift in the company's leadership and ownership structure.Key Takeaways
- Religare Enterprises withdrew appeal at NCLAT.
- CCI allowed Burman family to acquire 5.27% stake.
- Burman family now holds over 50% of REL shares.
- Rashmi Saluja removed as executive chairperson.
- Section 6(2) of Competition Act relevant in this case.
New Delhi, March 9 (NationPress) Religare Enterprises has officially retracted its appeal at the National Company Law Appellate Tribunal (NCLAT) concerning the directive from the Competition Commission of India (CCI).
This directive permitted four entities linked to the Burman family to obtain a 5.27 percent stake in the financial services firm.
This action comes after the Burman family secured a controlling interest in Religare Enterprises Limited (REL) by acquiring 25.16 percent of the company's shares through an open offer.
As a result of this acquisition, the Burman family, known for owning the FMCG giant Dabur and Eveready, now possesses over 50 percent of REL’s shares, positioning them as the principal shareholders.
During the proceedings at NCLAT, the tribunal noted that Religare’s authorized representative communicated the company's choice to withdraw the appeal.
The four entities associated with the Burman family in this acquisition include Puran Associates Private Limited (PAPL), VIC Enterprises Private Limited (VIC), MB Finmart Private Limited (MFPL), and Milky Investment & Trading Company (MITC).
In February, as the Burman family's influence over the company expanded, the shareholders of Religare Enterprises voted to oust its then-executive chairperson Rashmi Saluja from her directorial role.
The board has also instructed subsidiary companies to begin the process of removing Saluja from their leadership positions.
Religare Enterprises initially contested the CCI's approval, asserting that the Burman entities failed to provide prior notification under Section 6(2) of the Competition Act before acquiring the stake.
The company claimed that the notice was given only after the acquisition was finalized, a detail it contended was overlooked by the CCI.
On the other hand, the Burman family defended its actions, arguing that Section 6(2) of the Competition Act mandates the CCI to assess whether such acquisitions affect market competition.
They contended that Religare never expressed concerns regarding the transaction resulting in monopoly or adversely affecting competition in the industry.
According to Section 6(2) of the Competition Act, any entity intending to merge or acquire must inform the CCI within 30 days of finalizing the agreement.
The withdrawal of Religare's appeal now paves the way for the Burman family to further entrench their control over the company.
