Takeover violations in acquisition of Global Trust Bank shares
Mumbai: According to the Securities and Exchange Board of India, the prime accused in the pay-order case, Ketan Parekh now in CBI custody, his associate firms and two prominent Gujarat-based corporate groups have allegedly violated takeover regulations in their acquisition of Global Trust Bank (GTB) shares.

Senior officials of the Securities and Exchange Board of India (Sebi), in a report to the Reserve Bank of India, said that Mr Parekh and two corporate groups had bought GTB shares representing 4.99 per cent of its paid-up capital and altogether had acquired about 14.99 per cent stake.

Sources at Sebi said this smacks of a deliberate attempt at avoiding the five per cent threshold limit under SEBI's takeover code and RBI guidelines.

Parekh's holding in GTB is officially declared to be in excess of 4.99 per cent. Sources said that about four per cent additional stock was cornered by other associates of Parekh taking the total block of shares to about 20 per cent concentrated among a few, which violates the takeover code.

To strengthen its case, SEBI said that the three had acted in concert as they had bought the shares during the same period in the run up to the merger announcement of GTB with UTI Bank and added said that the trio should have intimated the stock exchanges and GTB of their having exceeded five per cent threshold limit.

Sebi said that this amounted not only to violation of the takeover code but also smacked of insider trading as the groups were privy to the information of the impending merger. SEBI's contention is that these purchases were made to ramp up GTB share prices in order to obtain a favourable swap ratio for the shareholders of GTB.
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