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Sebi fillip for RPL flotation

Mumbai, Dec. 27: The hurdles to Reliance Power’s maiden flotation have been swept out of the way.

The Securities and Exchange Board of India (Sebi) today cleared Anil Ambani and Reliance Energy (REL) of a raft of charges that included short-changing potential shareholders of Reliance Power (RPL).

Sebi said none of the provisions of the Companies Act had been violated while transferring certain projects from Reliance Energy to RPL.

The market regulator directed that the entire promoters’ stake amounting to 20 per cent of the company’s post-issue capital would be locked in for a period of five years.

The directions came in response to a public interest litigation filed by the Rajkot Saher Jilla Grahak Suraksha Mandal before the Bombay High Court which had been referred to Sebi.

The decision clears the way for one of the largest capital issues in the country. Back in June, real estate giant DLF had raised Rs 9,187.50 crore from its issue which is the largest IPO till date.

The complainant had alleged that there had been a serious breach of corporate governance by REL and RPL. It submitted that the promoters of REL transferred certain high value projects such as Rosa Power and Sasan Power to RPL.

RPL is a company in which REL has a 50 per cent stake; the rest is owned by the promoters of REL — Anil Ambani and a couple of associate companies. The promoters of RPL were accused of making unjust gains through a process of mergers using several front companies.

The market regulator looked into two issues: the first pertained to the charge of violating the companies act while transferring projects to RPL; the second related to the status of the shares acquired by the promoters of RPL after the amalgamation of a group company.

The promoters had claimed that the entire component of 226 crore shares should be considered as promoters’ contribution to the equity of RPL and should be subject to a three-year lock-in.

Sebi said it was not competent to decide whether there had been a violation of the companies act. However, it said a letter from the ministry of company affairs had observed that there was no prima facie evidence of any violation of Section 293 of the act.

The market regulator said it would not rule on the charge that the shareholders of REL were being short-changed.

“Since the allegation that the interest of the shareholders of REL are adversely affected by the transfer of various interest by REL to RPL may be a matter relating to the oppression and mismanagement of REL and, as this issue is not within the jurisdiction of Sebi, we are not in a position to give any finding on this allegation. Accordingly, we are leaving this issue open for the complainant to take up with the appropriate forum,” it said.

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