Universal Properties Limited granted relaxation under the SEBI Delisting of Equity Share Regulations, 2009
The Securities and Exchange Board of India (SEBI) had received an application dated June 25, 2018 from UPL (Universal Properties Limited) under Regulation 25A of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations), seeking exemption from the provisions of Regulation 27 of the Delisting Regulations.
The Applicant has stated that the company is an inoperative company with no public or bank dues. Over the last 5 years, no business has been transacted by the Applicant and there has been an almost complete erosion of net worth of the company. The Applicant's accumulated loss is about 60% of its paid up capital and it is financially not viable for the Applicant to comply with the various provisions of the Companies Act.
With the meagre resources, the Company is just managing to clear the filing fees of MCA and Stock Exchange listing fee and is not in a position to even incur day to day establishment costs. Further, the turnover of the company for the last three financial years is NIL and the Applicant has been reporting losses for the said three financial years.
The Applicant had filed a delisting application dated 16th September, 2014 before SEBI seeking exemption from Regulation 27(3)(d) of Delisting Regulations. However, since SEBI did not havethepower to relax strict Regulations, 2009, at that point in time, the exemption was not granted.However, upon insertion of Regulation 25A by the SEBI (Delisting of Equity Shares) (Amendment) Regulations 2015, the Applicant has once again applied for exemption from the said provision.
The main issue revolved around the question whether the requirement for receiving consent of the shareholders holding at least 90% of public shareholding of a company, as mandated under Regulation 27(3)(d) of the Delisting Regulations, can be relaxed, given the facts and circumstances, in order to enable UPL to seek voluntary delisting.
It has been observed in this Order that under Regulation 25A, the Board has the power to relax strict enforcement of any of the requirementsunder the DelistingRegulations, if it is satisfied that the relaxation is in the interests of the investors in securities and the securities market.
The promoter of the Company holds 74.67% of the total paid up equity share capital of the company and the remaining 25.33% is held by 119 public shareholders. Applicant is exclusively listed on CSE and the Applicant has also made efforts in the past to delist itself by providing exit opportunity to the existing public shareholders but was unable to garner consent of the requisite number of public shareholders, a vast majority of whom were untraceable.
It has been opined that despite repeated attempts made by the Company it has been unable to contact the vast majority of the public shareholders. Thus, the Applicant may not be in a position to comply with the requirement under Regulation 27 (3) (d) of Delisting Regulations. Further, the Company has been in a dormant mode with no operations for the last 5 years. Company's net worth has been nearly wiped out and the Company does not have resources to comply with the regulatory requirements.
In view of the aforesaid, SEBI, through this order has granted the Applicant relaxation from the applicability of Regulation 27(3) (d) of the Delisting Regulations subject to the some conditions one of which is that the Applicant has to ensure compliance with Regulation 27(3)(c).