LIC Housing Finance Ltd has approached the Securities Appellate Tribunal (SAT) over the company’s preferential allotment of shares to its parent Life Insurance Corp of India (LIC).
Securities and Exchange Board of India (SEBI) as well as BSE and National Stock Exchange (NSE) have raised issues on compliance with the provisions of articles of association (AOA) of the lender.
Earlier this week, the company at its extraordinary general meeting (EGM) sought shareholders' approval for issuing preference shares to its promoter.
The housing finance company, which has been under SEBI’s lens in recent weeks
, was also asked by BSE and NSE to clarify on compliance with the provisions of AOA on the process for valuation of its shares offered to LIC.
The company has been asked to explain how it arrived at the decision to fix the issue price for the preference shares at Rs514.25 per share for allotting 4.54 crore shares to LIC.
At the meeting on Monday, LIC Housing Finance chairman MR Kumar explained to members the need and rationale for this confidence capital raising and how it is important in this COVID-19 scenario.
In a regulatory filing on Monday, LIC Housing Finance said that the verdict of SAT is expected soon, which may put these issues at rest.
The lender provided detailed explanation to the BSE and NSE and has reiterated that it is in compliance with the provisions of the AOA, as well as all the applicable rules and regulations, relating to the manner of computation of price of the preferential issue as per the applicable statutes.
After studying the responses of the company, the stock exchanges have directed that the matter is under examination by them and, in the interim, the company can conduct the EGM and carry out e-voting for the same.
However, the results of the e-voting process will not be made public; they will be kept in a sealed cover and will be disclosed in line with the directions received from the stock exchanges.
The company has informed that a case of preferential allotment is pending before the SAT and the verdict of the tribunal is expected soon, which may put these issues at rest.
The LIC Housing Finance case is similar to the PNB Housing Finance
, wherein, its proposed Rs4,000 crore capital infusion deal by allotting preference shares to US-based Carlyle Group and a few other investors, is facing regulator heat, as SEBI has questioned the rationale behind the fixing of the issue price.