Independent directors of Religare Enterprises Ltd (REL) have voiced strong opposition to a takeover bid by the Burman family, the promoters of FMCG giant Dabur, citing allegations of fraud and breaches of regulatory norms.
The dispute revolves around an open offer made by the Burman family to acquire a substantial stake in REL. As of August, they had amassed a 21.5% stake in the company, and in September, they acquired an additional 5.27% stake, triggering a mandatory open offer for an additional 26% stake from the public. However, this open offer requires approval from the Securities and Exchange Board of India (SEBI).
The independent directors, led by executive chairperson Rashmi Saluja, have accused the Burmans of violating regulatory obligations, potentially leading to adverse consequences for REL. Of the six-member board, five members are independent.
The allegations include collusion with former owners of REL, the Singh brothers, who were involved in fraud cases. Additionally, the directors raised concerns about the source of funds for the acquisition and alleged market manipulation. There is also a pending fraud case against Dabur India chairman Mohit Burman.
SEBI has taken note of these allegations and has requested evidence and documents from REL and JM Financial, the manager of the open offer. JM Financial denied collusion, asserting that the funds primarily come from debt financing provided to the acquirers.
The independent directors are urging a comprehensive review of the acquisition, emphasizing REL’s ownership of companies operating in regulated sectors. REL has diverse businesses, including Religare Finvest (lender to small businesses), Care Health Insurance (health insurance provider), Religare Housing Development Finance Corp (home loans), and Religare Broking (retail stock brokerage).
The Burman family strongly refuted the allegations, labeling them as “false, frivolous, and defamatory.” They suggested that these claims were an attempt to divert attention from certain share trades made by an unnamed REL executive.