To Exempt or Not to Exempt?

SEBI said no, SAT said yes and now the Arvind Remedies case has reached the Supreme Court. The short of this long story is that

Arvind Remedies needed to raise Rs 50 crore urgently so as to retain land for building a new manufacturing facility. The company decided to raise Rs 35 via a preferential allotment of shares to promoters taking their stake from 25.32% to 45.91%. Since that triggers the Takeover Regulations, the promoters asked SEBI to exempt them from an open offer. SEBI said no on grounds that the company could have gone the Rights way to raise money and that an exemption would deny large number of shareholders an exit opportunity. SAT disagreed saying the company needs the money. It is not for SEBI to determine fundraising methods; there is no consequent change in control and most importantly that SEBI has granted exemptions in other similar cases SEBI has now appealed to the Supreme Court who has issued a show cause notice to Arvind Remedies asking why it should not admit SEBI