Kishore Biyani And Future Group Entities To Challenge Capital Market Ban By SEBI
SEBI building in Mumbai. (Photo: BloombergQuint)

Kishore Biyani And Future Group Entities To Challenge Capital Market Ban By SEBI

Kishore Biyani, among India’s first retail entrepreneurs, his brother Anil Biyani and other group entities are likely to challenge an order by the market regulator that bars them from accessing the capital markets for a year.

In a statement to stock exchanges, Future Retail Ltd., one of Biyani’s flagship companies, said: “We understand that the relevant parties propose to challenge this order in in exercise of their statutory right to appeal.”

While Biyani has offered no statement yet, one his promoter entities, Future Corporate Resources Pvt., that has been ordered to disgorge over Rs 20 crore in “unlawful gains,” has issued a statement that the market regulator’s order is “untenable”.

...on merits, the SEBI Order is untenable since it treats a well-anticipated and publicly well-known impending reorganisation of the home furnishing businesses that the Future Group effected in 2017 to be unpublished information. The order will be challenged in exercise of the statutory right to appeal.
Future Corporate Resources Pvt. Statement

Also read: SEBI Restrains Future Group’s Kishore Biyani From Securities Market For A Year

The Securities and Exchange Board of India has restrained Kishore Biyani, his brother Anil Biyani, Rajesh Pathak, Rajkumar Pande and Future Corporate Resources Pvt., from accessing, dealing or being associated with the securities market for a period of one year. It has also restrained them from buying, selling or dealing in securities of Future Retail Ltd., for a period of two years, alleging violation of insider trading norms.

Both the Biyanis and Future Corporate have been directed to jointly disgorge an amount of Rs 17.78 crore, along with 12% interest from April 20, 2020 onwards. The disgorgement pertains to money allegedly earned by them from trades conducted on the basis of unpublished price sensitive information. An additional disgorgement of Rs 2.75 crore is to be jointly paid by Future Corporate Resources and FCRL Employee Welfare Trust.

The regulator has also imposed other penalties, including a penalty of Rs 1 crore each on Future Corporate Resources, Kishore Biyani and Anil Biyani.

As per the order, the existing holding of securities and units of mutual funds of the entities involved will remain frozen during the restraint period.

Impact On Future-Reliance Deal?

But, SEBI has provided that its order will not impede the proposed scheme of arrangement between several Future Group entities, led by Future Retail Ltd., with Reliance Retail Ventures Ltd.

Debarment/restraint/freeze imposed under this order shall not apply to those existing holding of securities of such debarred entities, in respect of which any scheme of arrangement under Section 230-232 of the Companies Act, 2013, is approved by NCLT, requiring extinguishment of such securities and/or receipt of other securities in lieu of such securities.
SEBI Order

Yet, the deal, that seeks to amalgamate several of Future Group’s retail assets with Reliance Retail, is currently on hold on account of a Delhi High Court order.

Amazon.com Inc, an investor in Future Group entities is seeking to block the deal on grounds that it violates its shareholder agreements with Future. Amazon has had success with an emergency international arbitration order but faced a mixed outcome when Future Group entities moved the Delhi High Court to seek smooth regulatory passage for the deal with Reliance.

Now, Amazon has moved the Delhi High Court seeking to enforce the emergency arbitrator’s stay on the deal. The court ordered status quo in the deal.

Amazon’s interventions have set up a three-cornered battle between the American online retail behemoth, billionaire Mukesh Ambani-back Reliance Retail and a cash-strapped Kishore Biyani and Future Group.

Also read: Delhi High Court Orders Status Quo On Future Group-Reliance Retail Deal

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