TECHNIP SA Vs. SMS HOLDING PVT LTD

JUDGEMENT

(1.) There are five main protagonists in these appeals, the appellant, Technip, a company incorporated in France, Coflexip, also incorporated in France, the Institut Francais du Petrol (referred to as IFP) which through its subsidiary ISIS, a company incorporated in France, was a shareholder in Technip and Coflexip, South East Asia Marine Engineering and Construction Ltd. (referred to as SEAMEC) , a company incorporated and registered in India and finally the respondents who are the shareholders of seamec. SEAMEC is a subsidiary of coflexip in the sense that Coflexip through a chain of wholly owned subsidiaries controls the majority shareholding in SEAMEC.

(2.) The question which arises for consideration in these appeals is whether Technip acquired control of SEAMEC through coflexip in April, 2000, or in July, 2001 there is no dispute that if Technip. controls Coflexip then it also controls SEAMEC and if there has been a change of control of SEAMEC then Technip would be bound to offer to purchase the shares of the minority shareholders in SEAMEC in accordance with the provisions of the Securities and Exchange Board of India (Substantial acquisition of Shares and Takeover) regulations, 1997 (hereinafter referred to as the regulations). The importance of the date of control/acquisition is because of the price of the shares payable on such public offer. In this case the price of SEAMEC shares in April 2000 was Rs. 238 per share which was much higher than the price of Rs. 43.12 per share in July, 2001. Technip had not made any public announcement at all, either in April 2000 or in July, 2001.

(3.) On the complaint of certain shareholders of SEAMEC before the Securities and exchange Board of India (SEBI) , proceedings were initiated against Technip under the Securities and Exchange Board of India Act, 1992 (referred as 'the Act'). SEBI held that French law applied to the takeover of Coflexip and consequently SEAMEC by Technip for the purpose of determining when such takeover was effected. It found that the Technip had obtained control of coflexip in July 2001 and had violated regulations 10 and 12 of the Regulations thereby acquiring 58.24% of the shares/voting rights and control in SEAMEC in July 2001 without making any public offer. Technip was accordingly directed by SEBI to make a public announcement as required under the Regulations within 45 days of its order taking 3rd July, 2001 as the specified date for calculation of the offer price technip was also directed to pay interest at the rate of 15% per annum to the willing minority shareholders of SEAMEC, for the delayed public announcement.