SEBI seeks SC nod to gain access to Raju brothers

With Ramalinga Raju continuing to elude SEBI even after spending weeks behind bars, the market regulator on Monday moved the Supreme Court seeking permission to interrogate the tainted Satyam-founder on the Rs 7,800 crore fraud in the IT major.

In its request, SEBI said that it was constrained to approach the apex court for urgent relief related to the most serious financial scam that had large-scale national and international ramifications.

A bench headed by Chief Justice KG Balakrishnan allowed SEBI to mention the matter tomorrow after Solicitor General GE Vahanvati and counsel Pratap Venugopal submitted the market regulator’s request.

Meanwhile, in another significant development that may help Satyam Computers' potential suitor to get control of the IT company at an affordable price, SEBI today said that it would amend regulations governing open offer to ensure transparent pricing.

The SEBI move followed a request from Satyam Board in this regard to relax the norm of 26-week average price to make an open offer.

"It was decided to appropriately amend the regulations to enable a transparent process for arriving at the price for such acquisition," SEBI Chairman CB Bhave told reporters in Mumbai after the Board meeting.

SEBI at SC

The market regulator moved SC today seeking permission to interrogate Ramalinga Raju on the Satyam fraud after the Andhra Pradesh High Court last week deferred to February 9, hearing on its request to quiz the tainted ex-chairman and his brother Rama Raju.

SEBI had moved the High Court challenging a lower court order, which denied it permission to interrogate the Raju brothers, who were arrested by the state police on January 9 -- the day a SEBI probe team had summoned them to appear before it in Hyderabad.

The Raju brothers, along with Satyam's former CFO Vadlamani Srinivas, are now in judicial custody.

The 6th Additional Chief Metropolitan Magistrate, Hyderabad, had refused permission on the ground that SEBI was not an investigating agency and there was no provision in law under which it could interrogate the Raju brothers.

A probe team from SEBI had landed in Hyderabad on January 8, a day after Ramalinga Raju disclosed the massive accounting fraud in the IT company.

Challenging the High Court order, SEBI said that it had appointed an investigator after Raju confessed to accounting irregularities in a letter to Satyam's Board of Directors.

According to the market regulator, the High Court should have seen that the Raju brothers cannot use judicial custody as a shield to avoid probe by expert agencies.

SEBI further said that just as police apply for custody, any other agency can also apply for access or custody and the same can be granted and the refusal to permit SEBI even to record the statements of the accused while in the custody was "arbitrary, unreasonable and perverse".

According to SEBI, merely because investigations by different agencies like CID, Enforcement Directorate, Serious Frauds Investigation Office, Registrar of Companies etc may overlap, it cannot be said that they cannot investigate simultaneously pursuant to the power conferred on them under their respective statutes.

Stating that the scam in the NYSE-listed Satyam Computers was the worst in the country's history, the advocates said that the company's market capitalisation has fallen from Rs 15,000 crores to Rs 2,000 crores.

SEBI to amend open offer rules

Even as SEBI announced the move to amend regulations governing open offer, its chairman Bhave said that the amendments will be made not only for the Satyam case, but for all similar situations that may arise in the future.

The Board recognises that the issue needs to be dealt with in a general context and not as a specific case, Bhave said, referring to the Satyam request.

Though Bhave declined to give any timeframe for the amendments in pricing rule, he said: "We are aware about the urgency of the situation."

Engineering major Larsen & Toubro has increased its stake in Satyam to over 12 percent. If it crosses 15 percent, the company would have to make an open offer to purchase another 20 percent from the market.

Among the other decisions taken today, SEBI made it mandatory for listed companies to declare dividend on per share basis instead of percentage basis followed at present.

Besides, the regulator has reduced the timeline for the completion of bonus issue to 15 days if the shareholder approval is not required and to 60 days where the approval is required. At present, the timeline for this procedure is six months.

SEBI also decided to shorten the timeframe to announce the price band for IPO in today's Board meeting. With this, the price band should be declared two days prior to the opening of IPO.

The regulator has also upped the up-front margin to be paid by allottees of warrants to 25 percent as against 10 percent at present.