Mumbai: Stock exchanges on Friday accepted the request of Uttam Galva Steels Ltd to reclassify ArcelorMittal Netherlands BV as a public shareholder in the company, said two people with direct knowledge of the matter.
“Uttam Galva had written to the exchanges on 9 March asking that ArcelorMittal be reclassified as a public shareholder. The exchanges agreed it was a technical issue. While National Stock Exchange of India Ltd (NSE) granted reclassification on 22 March, BSE Ltd did it today,” said one of the two people cited above, on condition of anonymity.
While BSE declined to comment, an email sent to NSE was not answered till press time.
The reclassification was important for ArcelorMittal as the Insolvency and Bankruptcy Code (IBC) prevents promoters from bidding for assets of an insolvent firm. Uttam Galva is in the second list of NPA (non-performing asset) accounts referred by the Reserve Bank of India (RBI) for resolution. Promoter status would have prevented ArcelorMittal from bidding for Uttam Galva as and when it was referred for resolution under IBC.
The reclassification was a technical issue as prior to 7 February 2018, ArcelorMittal held 29.05% of the share capital in Uttam Galva and was named as one of its promoters. On 7 February, ArcelorMittal sold its entire stake to Sainath Trading Co. Pvt. Ltd in an off-market sale.
As per existing norms, exchanges allow reclassification of promoter status on a case-to-case basis.
“In a case where a person does not hold a single share and does not exercise any direct or indirect control over the firm or has any special rights through any formal or informal arrangements, receiving approval of declassification of that person from stock exchanges or market regulator is a matter of procedure. Of course, bourses do examine the bona fides of the applicant so as to not allow misuse,” said Sumit Agrawal, a partner at Suvan Law Advisors. He represents ArcelorMittal.
Meanwhile, Numetal Mauritius Ltd has filed a separate plea challenging the decision of the committee of creditors disqualifying it as a bidder for Essar Steel. Numetal and ArcelorMittal were the two firms that had submitted bids for Essar Steel. Numetal was disqualified under section 29(a) of the IBC as Aurora Enterprises Ltd, owned by a trust controlled by Rewant Ruia, holds a minority stake in the firm.
Although, Numetal had filed a petition on 20 March at the Ahmedabad bench of the National Company Law Tribunal seeking clarification on its eligibility in anticipation of its bid being disqualified, the firm filed a separate application challenging the committee of creditors’ decision on 22 March, seeking an earlier hearing date, said a person close to the development. The case will be heard on 27 March. The tentative deadline for fresh bids is 2 April.livemint