Gillette gets relief from SAT on public float norm deadline

In a major blow to Securities and Exchange Board of India (SEBI), Securities Appellate Tribunal (SAT) today stayed market regulator from enforcing minimum public shareholding norm deadline of June 3 on Gillette India until further hearing, reports Ashmit Kumar of CNBC-TV18.

Today before the SAT, Sebi's senior councils were missing but Gillette's legal eagles were out in full force so that has cost the market regulator dearly.
The deadline for the minimum public share holding norm for private companies expires on June 3. Back in 2010 minimum public share holding requirements were raised to 25 percent which subsequently put a number of these companies on Sebi's radar one of them being Gillette India. Also read: OFS: Adani Ent, Novartis, Essar Ports oversubscribed
The promoter holding in Gillette stands at 88.9 percent, 76 percent by P&G and 12.9 percent by the Poddar Group. Gillette submitted a three part proposal, one being that SK Poddar will resign from his position as Chairman and had sought reclassification of his holdings as regular ordinary public share holding. The second part is that Poddar Group will sell 4 percent of its shareholding to the P&G Group at a 25 percent premium for relinquishing management control. In the third part P&G after acquiring the 4 percent will see its stake jump to 80 percent and will subsequently engage in an offer for sale (OFS) process to dilute its holdings to comply with the minimum public share holding norms.
This proposal of Gillette India was rejected by SEBI. It is this rejection which in fact has been challenged before the SAT.
Key takeaway here is that while a large number of companies as many as 75 are yet to comply with the deadline, SAT today that perhaps Sebi might have to reconsider the extension of the deadline. This does come on the back of months of UK Sinha reiterating that the deadline will not be extended. This interim relief could encourage other companies to also file similar suits; we could see spate of litigation.