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Reliance Group companies take legal action to protect stakeholders
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SME Times News Bureau | 09 Feb, 2019
Anil Ambani-led Reliance Group companies on Saturday said they will take
all appropriate legal steps against L&T Finance to protect and
enhance the value of their respective stakeholders.
The group
companies which have decided to take independent legal recourse include
Reliance Infrastructure, Reliance Capital and Reliance Power.
The
development comes a day after Reliance Group said a few NBFCs,
substantially L&T Finance and certain entities of Edelweiss Group,
have invoked pledge of listed shares of Reliance Group and made open
market sales of the value of approximately Rs 400 crore from 4.2.2019 to
7.2.2019.
The market capitalisation of the three companies were
badly impacted due to the open market sales. The three companies
together have around 46.75 lakh shareholders.
On Friday, Reliance
Group said: "The purported exercise of rights to enforce the security
is illegal and excessive, and against the process and requirements of
the respective borrowings' documentation.
"The illegal,
motivated and wholly unjustified action by the above two groups has
precipitated a fall of Rs 13,000 crore, an unprecedented nearly 55 per
cent, in market capitalisation of Reliance Group over just these four
days, causing substantial losses to 72 lakh institutional and retail
shareholders, and harming the interests of all stakeholders," the
statement said.
According to Reliance Group, the manner of
conduct of the above open market sales, without any orderly market
disposal through a bid or structured process for shares comprising the
holding of the promoter group, is also illegal on several counts like
price manipulation, insider trading, front running and market abuse.
The
Reliance Group claimed the sale by L&T Finance and others is in
violation of various regulatory provisions, including the SEBI
(Prohibition of Fraudulent and Unfair Trade Practices) Regulations,
which are applicable to all persons (including NBFCs) dealing in listed
securities, whether on invocation of pledge or otherwise.
The
statement said group company Reliance Communications (RCOM) has
announced plans for debt resolution through the National Company Law
Tribunal (NCLT) and there was no adverse impact of this unrelated RCOM
proposal on Reliance Capital Ltd., Reliance Infrastructure Ltd. and
Reliance Power Ltd.
As per the statement, Reliance Capital Ltd.,
Reliance Infrastructure Ltd. and Reliance Power Ltd. (and their various
subsidiaries) are performing satisfactorily on all operating parameters,
and there is no change whatsoever on any aspect as compared to the
position prevailing prior to these sales.
On its part L&T
Finance on Friday refuted and denied allegations it had granted loans
against pledge of shares to Reliance Group companies.
"As per
loan and pledge agreements, borrower did not cure various events of
defaults including providing margin for shortfall in the stipulated
security cover. Despite various notices in the past few months, events
of defaults continued," L&T Finance said in a statement.
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