Sebi had issued an order in July stating the sale of assets and intellectual property (IP) — except the deal involving transfer of the ‘Jamavar’ trademark — didn’t amount to RPT.
ITC had challenged Sebi’s ruling, stating that the entire Brookfield transaction should be viewed as a composite deal and treated as an RPT.
It further argued that JM Financial ARC, which holds 26 per cent stake in Leela, shouldn’t be allowed to vote on the transaction. This is because the Sebi order states it has failed to ensure compliance with Takeover Regulations.
ITC had also moved National Company Law Tribunal (NCLT) alleging oppression and mismanagement by Leela and JM Financial.
Following the complaints, Sebi launched an investigation into the deal and ordered
Leela not to proceed with the postal ballot. Sebi had directed Leela to provide all relevant details of each of the sale transactions with Brookfield. Leela had to provide the valuation methodology used to arrive at the valuation.
Had Sebi or SAT held the transaction between Hotel Leela and Brookfield as a related party deal, the transaction would have required the approval of ‘majority of minority’ investors.
This could have made the sale difficult given key minority shareholders ITC and LIC were opposed to it.