SEBI has rejected an exemption application filed by Telecanor Global Limited’s promoter Ms. Vijay Lakshmi Praturi seeking relief from open offer obligations under the SEBI (SAST) Regulations, 2011. The order underscores SEBI’s emphasis on protecting minority shareholders’ rights and maintaining market fairness in preferential allotments.
⚖️ Background
The Securities and Exchange Board of India (SEBI), through its Whole Time Member Mr. Kamlesh C. Varshney, passed an order on October 3, 2025, in the matter of Telecanor Global Limited.
The order dealt with an application filed by Ms. Vijay Lakshmi Praturi, a promoter and proposed acquirer, seeking exemption from the mandatory open offer requirement under Regulations 3 and 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations”).
🏢 About the Target Company
Telecanor Global Limited is a Hyderabad-based listed company incorporated under the Companies Act, 1956, having its shares listed on BSE Limited (BSE).
As on June 30, 2025, the company had a paid-up share capital of ₹11.05 crore, divided into 1.10 crore fully paid-up shares and 3.33 lakh partly paid-up shares. On a fully diluted basis, the share capital aggregated to 1.13 crore equity shares.
📊 Pre-Transaction Shareholding Pattern
| Category | Shareholding (%) |
|---|---|
| Promoters (Mr. Marutiram & Ms. Vijay Lakshmi Praturi) | 22.99% |
| Public Shareholders | 77.01% |
| Total | 100% |
💼 Details of the Proposed Transaction
The Target Company proposed a preferential allotment of:
- 30,00,000 equity shares, and
- 40,00,000 convertible share warrants
to Ms. Vijay Lakshmi Praturi, one of the promoters.
📈 Post-Acquisition Scenario
- Upon allotment of 30 lakh shares, Ms. Praturi’s holding would rise from 13.31% to 31.38%.
- Upon conversion of warrants, her holding would increase to 42.39%.
- The combined promoter shareholding would reach 47.88%.
This triggered the open offer obligation under Regulations 3(1), 3(2), and 4 of the Takeover Regulations.
🧾 Grounds for Seeking Exemption
The applicant sought exemption on the following grounds:
1. No Change in Control
Ms. Praturi and her husband are the only promoters. The proposed acquisition would not alter control or management structure.
2. Financial Distress of the Company
Telecanor had defaulted on its loans to Dhanlaxmi Bank, which later sold the NPA to Phoenix ARC Private Limited (PARCPL).
A One-Time Settlement (OTS) was entered into with Phoenix ARC in March 2025, requiring repayment of ₹2.25 crore within a stipulated period.
3. Infusion for Revival
The promoter proposed to infuse funds through the preferential issue to settle OTS dues, revive the company, and preserve shareholder value.
4. Avoiding Hardship
The applicant argued that the cost of a public announcement and open offer (approx. ₹2 crore) would burden her financially, reducing available funds for debt settlement and revival.
5. Investor Protection and Precedents
The acquirer cited SEBI’s earlier exemption orders in cases such as SpiceJet, Patel Engineering, and SPEL Semiconductors, arguing that similar principles should apply since the transaction was aimed at company revival, not control gain.
🧠 SEBI’s Observations
SEBI conducted a detailed legal and factual examination of the request. The following were the key findings:
1. Applicability of Open Offer
The proposed acquisition clearly triggers Regulations 3(1), 3(2), and 4 of the SAST Regulations since the acquirer’s shareholding would cross the 25% threshold and subsequently increase by more than 5% in a financial year.
2. Intent and Impact
While SEBI recognized the company’s financial distress, it noted that preferential allotments alter the ownership structure and impact minority shareholders’ rights, as they do not have equal participation opportunities like in a rights issue.
3. Availability of Alternative Routes
SEBI emphasized that rights issues or shareholder loans are alternative mechanisms that allow fund infusion without compromising public shareholders’ rights.
The regulator noted that the applicant had not explored these avenues adequately.
4. Inapplicability of Cited Precedents
The cited SEBI orders were found factually distinguishable, as they related to cases involving:
- Debt-to-equity conversions under RBI-approved restructuring,
- Rights issues,
- Court-approved schemes, or
- Corporate Insolvency Resolution Processes (CIRP) under the IBC.
In contrast, Telecanor’s case involved a voluntary preferential allotment initiated by the promoter without external regulatory compulsion.
5. Investor Protection Principles
Citing the Supreme Court’s ruling in Nirma Industries Ltd. v. SEBI [(2013) 8 SCC 20], SEBI reiterated:
“Ordinary shareholders cannot be deprived of their valuable right to have an exit option under the Takeover Regulations.”
Allowing promoters to bypass open offer obligations on the ground of financial distress would undermine investor protection and could lead to misuse by existing management.
6. Regulation 10(2B) – Distressed Company Clause
SEBI observed that even under Regulation 10(2B) — which provides specific relief to acquirers in cases of distressed companies — promoters are explicitly disqualified from seeking exemption.
Thus, the applicant’s request was inconsistent with the regulatory intent.
🧩 Conclusion of SEBI
After weighing the facts and submissions, SEBI rejected the exemption application filed by Ms. Vijay Lakshmi Praturi.
“The exemption, if granted, would affect the rights of public shareholders. The Target Company may consider other fund-raising methods such as a rights issue, which would protect the rights of all shareholders.”
(SEBI Order, Para 15)
🧾 Final Order Summary
Authority: Kamlesh C. Varshney, Whole Time Member, SEBI
Order Date: October 3, 2025
Outcome:
Application for exemption under Regulations 3 & 4 of SEBI (SAST) Regulations, 2011 – Rejected
Reasoning:
- Preferential allotment would dilute public shareholding without exit rights.
- Alternate fund-raising routes available.
- Promoter not eligible for exemption under Regulation 10(2B).
- Upholding minority shareholder protection.
⚖️ Legal Commentary and Analysis
This order serves as a landmark reiteration of SEBI’s policy on promoter-linked capital infusions and investor protection.
Key Takeaways:
- No Blanket Exemption for Distress:
Promoters of financially stressed companies cannot bypass open offer obligations under the pretext of revival. - Preferential Issue vs Rights Issue:
Preferential issues are selective and dilutive, while rights issues are equitable and preserve shareholder participation rights. - Investor Exit Rights Reinforced:
SEBI reaffirmed that minority shareholders’ exit opportunity is a fundamental principle under the Takeover Code. - Regulatory Discipline for Promoters:
Promoters must demonstrate genuine hardship and lack of alternatives before seeking relief — financial distress alone is insufficient. - Consistency with Jurisprudence:
The reliance on Nirma Industries v. SEBI underscores SEBI’s continued adherence to the Supreme Court’s shareholder protection doctrine.
📚 Conclusion
The Telecanor Global Limited order (October 3, 2025) reinforces SEBI’s investor-centric regulatory philosophy — ensuring that revival efforts, even if genuine, do not override statutory safeguards designed for minority shareholders.
By denying the exemption, SEBI sends a clear message:
Corporate restructuring must not compromise transparency, fairness, or the right to an equitable exit.
🔖 Citation
Order No.: WTM/KCV/CFD/09/2025-26
Title: In the matter of Proposed Acquisition of Shares and Voting Rights in Telecanor Global Limited
Date: October 3, 2025
Authority: Kamlesh C. Varshney, Whole Time Member, SEBI
💬 Hashtags
#SEBI #TakeoverRegulations #CorporateGovernance #InvestorRights #PreferentialAllotment #SecuritiesLaw #MergersAndAcquisitions #CorporateLawIndia