Are we allowed to transfer shares to Adani Group firm: NDTV's Roys ask Sebi

NDTV had earlier said Sebi had restrained the Roys from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of two years, ending on November 26 2022

NDTV founders Radhika and Prannoy Roy have informed New Delhi Television - the promoter group vehicle of NDTV -- RRPR Holding Private has written a letter on Sunday to the Securities and Exchange Board of India (Sebi) asking it to determine whether the Sebi order dated November 27, 2020, restricts the conversion of warrants issued to Vishvapradhan Commercial Private (“VCPL”) into equity shares of the promoter group vehicle RRPRH.

On August 23 2022, VCPL, in a notice to RRPRH, had intimated that it was exercising its right to convert warrants issued to it in 2009 into equity shares which would give VCPL the control of 99.5 per cent of RRPRH. 

RRPRH issued the warrants after it took an interest-free loan from VCPL -- then owned by a Mukesh Ambani-owned entity.

But NDTV had said Sebi, in its order, had restrained the Roys from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of two years, ending on November 26 2022; hence it cannot transfer the shares.

RRPRH has also informed VCPL of its letter to Sebi.

Corporate lawyers said approaching Sebi is a good move by the NDTV promoters. 

"It will give valid justification for delay/denial by NDTV promoters, in case of legal action by Adani Group against the NDTV promoters, for breach of loan agreement/ terms of a warrant by not converting the warrants into equity. 

Secondly, though not identical, there is a precedent whereby Sebi in the past had allowed to release pledged shares since the pledgee was restricted in dealing in securities by Sebi. However, facts and implications in both matters are different; hence approval by Sebi is very subjective. 

In the precedent, the non-approval was causing loss to the pledgor, and similarly, Adani group may have to demonstrate/justify the need for warrant conversion into equity. And finally, until Sebi approval comes, NDTV promoters will get time to prepare for white knight/competing offer," said Supreme Waskar, a corporate lawyer.