The western region bench of the Company Law Board has rejected a petition filed by the co-promoters of Zandu Pharmaceuticals Works opposing an alleged take-over bid by rival Emami, saying it has no jurisdiction in this issue and adding that the Securities and Exchange Board of India needed to intervene.
With the CLB decision, the issue between Kolkata-based Emami and the Mumbai-based Parikh family for control of Zandu will continue to be unsettled along with the insider trading allegations against the Vaidyas, Zandu's other co-promoter family.
The CLB was hearing a petition filed by Zandu, which sought an injunction on Emami's voting rights till the final disposal of the case.
Emami's open offer to Zandu shareholders will be argued at a later stage, the CLB order said. The order also gives the green signal for the Zandu annual general meeting, which is expected to be held in the second week of September.
Zandu has been warding off a take-over bid by Emami, which bought 24 per cent from the Vaidyas for around Rs 120 crore in May this year. Emami announced that it had bought the Vaidyas' stake through a share purchase agreement, taking Emami's total stake in Zandu to 27.5 per cent.
The Parikhs, with nearly 25 per cent, then approached Sebi and the CLB to stave off Emami's attempts to get a foot-hold in its company. However, the CLB reportedly advised Zandu's promoters to take up the issue with Sebi.
But the market regulator is yet to approve Emami's open offer for 20 per cent stake in Zandu, slated to have opened on July 24. Under Indian laws, any acquisition beyond 15 per cent must be followed by a mandatory 20 per cent open offer.
So in August, the Parikhs approached the Bombay High Court claiming they had the right of first refusal in buying the Vaidya family stake and challenged the acquisition of the company's shares on grounds that it is a gross violation of various laws such as the Takeover Regulations, 1997, the Sebi Insider Trading Regulations, 1992, and the Companies Act, 1956.
In the petition, the Parikh family levelled charges of insider trading against Devkumar Vaidya, the founder's descendant who, with his sister, sold shares to Emami and kicked off a takeover battle.
On the other hand, Emami has sent legal notices to directors of Zandu claiming it has not received the agenda of Zandu's annual general meeting. In its order dated August 7, the court directed the CLB to look into the Parikhs' allegations of a breach of the takeover code.
The Zandu share price went up 5 per cent to Rs 15,765. 40 on Wednesday on the Bombay Stock Exchange against Emami's open offer price of Rs 7,315. Emami's shares were 1.83 per cent up and closed at Rs 301.