Following the complaints, the capital markets regulator launched an investigation into the deal and ordered Leela
not to proceed with the postal ballot.
However, the Sebi order issued last month was a setback to ITC
and LIC, as it held that the sale of assets and intellectual property (IP), except the deal involving transfer of ‘Jamavar’ trademark, didn’t amount to an RPT. ITC is of the view that the entire Brookfield transaction should be viewed as a composite deal and the RPT portion should be detached from the entire deal.
In addition, ITC has contended that JM ARC, which holds 26 per cent stake in Leela, shouldn’t be allowed to vote on the transaction. This is on account of the Sebi order stating that it has failed to ensure compliance with the Takeover Regulations.
The Sebi order mentions that only the ‘Jamavar’ transaction requires the approval of ‘majority of minority’ shareholders, while the rest can be passed by way of ordinary resolutions. The regulator has directed a fresh vote on the deal. Besides, Sebi has directed Leela to provide all relevant details of each of the sale transactions, including asset sale transaction as well as additional IP transactions.
It has called for details with “specific information identifying the transactions between the company and Brookfield, and promoters and Brookfield, including the amount involved therein under separate tables with the split consideration amount under each head”.
Leela has also been directed to provide the methodology used to arrive at the valuations.