CHENNAI: Equity warrants issued by a company are marketable securities and the holder of such warrants can exercise the option to convert on time, said a Supreme Court lawyer and a corporate law expert.
He said when asked about the steps taken by the Adani Group to take control of NDTV based on information available in the public domain.
“Stock warrants are negotiable instruments and the issuance of stock warrants presupposes the underlying shares of the issuing company pursuant to such warrants,” D. Varadarajan told IANS. , Supreme Court attorney specializing in corporate/competition/insurance law.
The holder of equity warrants, in this case Vishvapradhan Commercial Private Ltd (VCPL), a subsidiary of Adani Enterprises Ltd, is free to exercise the option to convert the warrants into equity within the window of time indicated and incorporated into the warrants. , he added.
“Therefore, the issuing company (in this case RRPR Holding, the investment vehicle of NDTV founders Prannoy Roy and Radhika Roy and holding 29.18%) would have been aware of and should have considered the possibility of a conversion of equity warrants into shares,” Varadarajan said.
According to Varadarajan, the maximum extent of the acquisition of shares by conversion of stock warrants is premeditated by the issuing company.
“Therefore, it is inadmissible to shout and shout under various pretexts and to stifle the automatic process of conversion of warrants into shares, after taking advantage of the money represented by the share warrants by the company issuer by voluntarily issuing the warrants initially.”
On August 23, VCPL notified RRPR Holding of its decision to convert the equity warrants issued to it in 2009 into shares and the Adani Group launched an open offer to acquire a 26% stake in NDTV.
The conversion of the subscription warrants into shares would lead Vishvapradhan Commercial to take control of 99.5% of RRPR Holding which holds 29.18% of the capital of NDTV.
Since the notice of conversion of mandates, the founders of RRPR Holding and NDTV, Prannoy Roy and Radhika Roy, have claimed that the transaction requires the authorization of the Securities and Exchange Board of India (SEBI) and the Department of Income Tax. Income.
They also said the decision to convert the stock warrants into RRPR Holding shares by VCPL was not discussed with them.
VCPL has requested RRPR Holding to cease and desist from repeating the false and misleading statements, suggestions, inferences and assertions it has made.
VCPL again requested RRPR Holding to take all necessary measures and perform its obligations as specified in the Notice, immediately and without further delay.
A shareholder with a 26% stake in a corporation can prevent the passing of a special resolution requiring a minimum of 75% of the members voting in favor.
If the stock warrants of Vishvapradhan Commercial are converted into shares of RRPR Holding, then the former will control more than 26% of the capital of NDTV.
Meanwhile, NDTV’s share price continued its upward spiral on Friday to touch Rs 515.10.
“Who the stock buyers are will only be known when the buyers approach NDTV for the name transfer,” Varadarajan said.
On August 25, NDTV in a regulatory filing said that SEBI had blocked its founder-promoters Prannoy Roy and Radhika Roy from accessing the securities market and further prohibits buying, selling or trading in securities. securities, directly or indirectly, or to be associated. with the securities market in any way for a term of two years, which expires on November 26.
NDTV has postponed its 34th Annual General Meeting to September 27 from the previously set date of September 20.
Due to the date change of the AGM, the company’s membership register and stock transfer book will now remain closed from September 20 to September 27 (both days inclusive), NDTV had reported.