Religare shareholder appeals Delhi HC order allowing Burman open offer
A minority shareholder of Religare Enterprises Ltd (REL), Sapna Govind Rao, has filed an appeal against a Delhi High Court decision that permitted the Burman family's open offer to acquire an additional 26% stake in the company. Rao, who owns 500 shares in REL, had previously sought to halt the open offer and postpone the company's Annual General Meeting (AGM) scheduled for February 7, 2025, but her plea was dismissed by Justice Manoj Jain on January 30.
In her appeal, Rao is challenging the Reserve Bank of India's conditional approval granted on December 9, 2024, which allowed the Burman family, owners of Dabur, to proceed with the acquisition. She is requesting a stay on the acquisition until a fair assessment is completed. The division bench of the Delhi High Court is expected to hear the appeal soon.
The Burman family's open offer, priced at ₹235 per share, commenced on January 27 and is set to close on February 7. This move has faced opposition from various quarters, including a higher counteroffer from U.S.-based businessman Digvijay 'Danny' Gaekwad, who proposed acquiring up to 55% of REL at ₹275 per share. However, the Securities and Exchange Board of India (SEBI) returned Gaekwad's offer, stating it did not conform to the regulator's exemption application rules under India's takeover code.
The ongoing legal and regulatory developments have added complexity to the Burman family's efforts to increase their stake in REL, a company with interests in financial services, including health insurance and broking.
Feb 4, 2025, 18:50 IST
Religare Shareholder Appeals Delhi HC Order Allowing Burman Open Offer
1. Shareholder Challenge – Minority shareholder Sapna Govind Rao has appealed the Delhi High Court's decision allowing the Burman family's open offer for a 26% stake in Religare Enterprises Ltd (REL).
2. Previous Plea Dismissed – Rao had earlier sought to block the open offer and postpone REL's AGM on February 7, but her request was rejected by the Delhi HC on January 30, 2025.
3. Regulatory Approval in Question – The appeal challenges the Reserve Bank of India’s (RBI) conditional approval granted on December 9, 2024, which permitted the Burman family's acquisition.
4. Open Offer Timeline – The Burmans' offer, priced at ₹235 per share, started on January 27 and will close on February 7, 2025.
5. Competing Offer – U.S.-based businessman Digvijay 'Danny' Gaekwad proposed a counteroffer at ₹275 per share for up to 55% of REL but faced rejection from SEBI due to non-compliance with takeover regulations.
6. Legal and Market Impact – The appeal adds legal uncertainty to the Burmans' takeover plans, influencing investor sentiment and REL’s market trajectory.
Religare Shareholder Appeals Delhi HC Order Allowing Burman Open Offer
The ongoing battle over Religare Enterprises Ltd. (REL) has intensified as a minority shareholder, Sapna Govind Rao, has filed an appeal against the Delhi High Court’s decision that allowed the Burman family’s open offer to acquire an additional 26% stake in the company. This legal challenge has added uncertainty to the already controversial takeover attempt by the Burmans, who are the promoters of Dabur India Ltd.
---
Background of the Dispute
Religare Enterprises Ltd. (REL) is a diversified financial services group with interests in health insurance, lending, and broking services. The Burman family, already the largest shareholder in Religare, launched an open offer to increase its stake to take control of the company. The offer, priced at ₹235 per share, was approved by the Reserve Bank of India (RBI) on December 9, 2024.
However, the offer has faced opposition from some stakeholders. Sapna Govind Rao, a minority shareholder holding 500 shares in REL, had earlier filed a petition in the Delhi High Court seeking to block the open offer and delay the company’s Annual General Meeting (AGM) scheduled for February 7, 2025. Her plea was dismissed by Justice Manoj Jain on January 30, 2025, prompting her to challenge the decision by filing an appeal.
---
Key Legal Arguments in the Appeal
1. Challenge to RBI Approval
Rao’s appeal raises concerns over the RBI’s conditional approval, questioning whether due process was followed in allowing the Burman family to proceed with their acquisition.
2. Demand for a Fair Review
She has requested the court to pause the acquisition until an independent and transparent review is conducted, ensuring that all shareholders’ interests are protected.
3. Corporate Governance Concerns
The appeal also highlights corporate governance issues, arguing that the Burman family’s takeover may not be in the best interest of minority shareholders.
---
Competing Offer and SEBI’s Involvement
Adding further intrigue to the situation, U.S.-based businessman Digvijay ‘Danny’ Gaekwad has proposed a competing bid to acquire up to 55% of REL at ₹275 per share—a higher offer than the Burman family's ₹235 per share bid.
However, SEBI (Securities and Exchange Board of India) rejected Gaekwad’s proposal, citing non-compliance with India’s takeover regulations. According to SEBI, Gaekwad's proposal did not follow the required exemption application procedures, making it ineligible under India’s takeover code.
---
Market Impact and Future Implications
1. Stock Market Reaction
The ongoing legal battle has created uncertainty in the market, affecting REL’s share price. Investors are closely watching how the legal developments will impact the company’s ownership structure.
2. Corporate Control and Governance Issues
If the Burmans succeed in their open offer, they will gain majority control over Religare, which could lead to management and strategic changes. Minority shareholders fear that their interests might not be adequately represented under new leadership.
3. Legal Precedent for Takeovers in India
This case could set an important legal precedent for corporate takeovers in India, particularly concerning regulatory approvals, shareholder rights, and governance transparency.
---
What’s Next?
The Delhi High Court’s division bench is expected to hear Rao’s appeal soon, which could either delay or impact the Burman family’s open offer.
If the appeal is successful, the RBI’s approval might be reviewed, and the open offer could be temporarily halted.
Meanwhile, investors and stakeholders await SEBI’s next move regarding Gaekwad’s competing bid and any potential regulatory intervention.
---
Conclusion
The battle for control over Religare Enterprises continues to unfold with legal, financial, and corporate governance implications. The Delhi High Court's decision on the appeal will be crucial in determining whether the Burman family can proceed with their open offer or if the process will be further scrutinized.
With multiple stakeholders involved—including the RBI, SEBI, Religare’s management, and minority shareholders—the final outcome will shape the company’s future while also setting an example for corporate takeovers in India.