SEBI Closes Proceedings Against Religare, Rashmi Saluja Over Burman Group Open Offer

The Securities and Exchange Board of India (SEBI) has disposed of proceedings against Religare Enterprises Limited (REL), its former Executive Chairperson Rashmi Saluja and certain directors over their alleged non-cooperation during the Burman Group's open offer.

The regulator held that no further directions were warranted as the open offer had already been completed and the interim directions issued to facilitate it had served their purpose.

SEBI quasi-judicial authority Biju S passed the order.

The proceedings arose from an Interim Order-cum-Show Cause Notice issued in June 2024 against REL, its then Executive Chairperson Rashmi Saluja and certain directors. SEBI had alleged that they failed to cooperate with the open offer launched by entities of the Burman Group to acquire shares in REL.

The Burman Group, which then held a 21.54% stake in REL, announced the open offer in September 2023 after proposing to acquire additional shares that would take its shareholding beyond 25%, triggering a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations. The offer was to acquire an additional 26% stake in REL for over ₹2,115 crore.

According to SEBI, despite being advised to do so, REL did not apply to the Reserve Bank of India, the Insurance Regulatory and Development Authority of India, or SEBI for the statutory approvals required for the open offer.

Instead, the company raised objections before the regulator and questioned whether the Burman Group was a "fit and proper" acquirer.

SEBI subsequently directed the noticees to apply for the requisite approvals, take all necessary steps required for the acquirers to fulfil their obligations under the takeover regulations, and constitute a Committee of Independent Directors if one had not already been formed.

In their replies, the independent directors submitted that they had relied on representations made by Rashmi Saluja and were not involved in the company's day-to-day management. They also pointed out that the open offer had since been completed and control of REL had passed to the Burman Group.

The regulator noted the submissions regarding Rashmi Saluja's alleged personal motives but observed that those issues fell outside the scope of the present proceedings.

"I find that the same do not call for determination at this stage, since the principal issue that formed the basis of the proceedings has already been resolved," SEBI observed.

SEBI further noted that the interim directions had been issued solely to facilitate the open offer. Since the offer had been completed and control of REL had passed to the Burman Group, those directions had already achieved their purpose.

Referring to the Securities Appellate tribunal's rulings in PWC v. SEBI and Mritunjay Kumar v. SEBI, the regulator observed that its powers under Sections 11 and 11B of the SEBI Act are preventive and remedial rather than punitive.

"I note that the jurisprudence under sections 11 and 11B of the SEBI Act recognizes that such directions are preventive as well as remedial in nature. Consequently, where the alleged irregularity has already been cured and the corrective steps have been fully implemented, the very object of a remedial direction stands satisfied," it ruled.

Accordingly, the securities market watchdog disposed of the Interim Order-cum-Show Cause Notice without issuing any further directions against the noticees.