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PNB Housing Finance vs SEBI: SAT gives nod for EGM on June 22; Voting results to not be declared till… –

The tribunal has also directed PNB Housing Finance to issue specific directions to NSDL to not reveal the voting results. The matter will now come up for final hearing on July 5.

In an interim order, the  Securities Appellate Tribunal (SAT) today gave the nod to PNB Housing Finance to hold its Extraordinary General Meeting  (EGM) scheduled for June 22 which would vote on the public sector lender’s Rs 4,000 crore deal with a consortium led by private equity giant Carlyle.

However, the tribunal directed that the results of the voting on the proposed transaction would not be declared and kept in a sealed cover till further orders are passed by it. PNB Housing Finance was also directed by the tribunal to issue specific directions to NSDL to not reveal the voting results. The matter will now come up for a final hearing on July 5. The interim order was passed orally by SAT and the written order is awaited.

The directions by SAT were passed on an appeal filed by PNB Housing Finance which had challenged the directions by SEBI relating to the valuation procedure of the former’s Rs 4,000 crore transaction with the Carlyle-led consortium. The consortium includes former HDFC Bank MD and CEO Aditya Puri and private equity funds General Atlantic and Ares SSG. PNB Housing Finance made the announcement in a disclosure to the stock exchanges.

On June 20, 2021, Moneycontrol was the first to report that the public sector lender was likely to move the SAT and challenge the directions from SEBI.

In a letter sent to the public sector lender last week, the market regulator halted the deal temporarily and said the notice for an EGM scheduled for June 22 was not consistent with the firm’s articles of association. SEBI directed the lender to undertake the valuation exercise based on the firm’ articles of association.

The market regulator said the notice given on May 31 for EGM is “ultra-vires of Article of Association (AOA) and shall not be acted upon until the company undertakes the valuation of shares as prescribed under 19(2) of AOA, for purpose of preferential allotment, from an independent registered valuer as per the provisions of applicable laws. The said report shall be considered by the Company’s Board while deciding on the preferential issue of shares and warrants.”

The high-profile deal has been shrouded in controversy. Moneycontrol was the first to report that SEBI is examining the deal after a proxy advisory firm, SES (Stakeholders Empowerment Services) led by former Sebi ED JN Gupta, questioned the proposed investment by the US private equity major overvaluations and interest of minority shareholders.

Ashwin Mohan