Supreme Court dismisses SEBI’s appeal against orders issued by SAT on PNB Housing Finance’s fundraise plan

SEBI’s appeal had been against the interim order given by the SAT earlier this year in June, where the statutory body restricted PNB Housing Finance Ltd. from revealing the results of the voting process organised amongst its shareholders in regards to the company’s proposed fundraising plans. 

The Supreme Court on Wednesday, October 20, dismissed an appeal filed by the Securities and Exchange Board of India (SEBI) against an order passed by the Securities Appellate Tribunal (SAT) in a matter related to PNB Housing Finance Ltd.’s planned equity capital fundraise of Rs. 4,000 crores.

After being notified by the counsel of PNB Housing Finance Ltd. that the company has reconsidered the matter at hand and reached the decision to not proceed with the issue by filing an application before the Securities Appellate Tribunal to withdraw its appeal, the bench headed by Justice L Nageswara Rao rejected SEBI’s appeal against SAT as “infructuous.” 

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“In view of the subsequent developments, where the respondent does not want to pursue the matter, the appeal is dismissed as infructuous,” stated the apex court bench which also comprised former Bombay High Court judge B.R Gavai.

SEBI’s appeal had been against the interim order given by the SAT earlier this year in June, where the statutory body restricted PNB Housing Finance Ltd. from revealing the results of the voting process organised amongst its shareholders in regards to the company’s proposed fundraising plans. 

Promoted by the Punjab National Bank, PNB Housing Finance had first proposed its equity raise plan on May 31, this year. As per the plan, the company was to allot preference shares and warrants to a few investors directed by US-based private equity and alternative asset management firm Carlyle Group. 

The subsequent voting was, therefore, a part of a special resolution to get the green light on the plan to raise Rs. 4,000 crores by the company’s current shareholders. However, the plans were disrupted when a proxy advisory firm alleged that the issuance of preference shares at much lower rates to new investors was against the interests of the current promoters and minority shareholders of the company. 

The SEBI then interposed and demanded the housing finance company to hold onto its plans until a valuation of its shares was done by an independent authorised valuer. However, the company defended its decision to price its preferred shares at Rs. 390 apiece, contending that the price was in line with the regulations issued by the SEBI.