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Big Win for Minority Shareholders – Schneider Delisting Case

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In a significant historical development, Schneider Electric President Systems Limited decided to withdraw its appeal in the Securities Appellate Tribunal against the SEBI Order dated January 19, 2021. The SEBI Order had directed the French company to either re-list on a nationwide stock exchange or provide an exit opportunity to its public shareholders through the delisting mechanism, as mandated by SEBI. This directive came after Regstreet Law Advisors represented a group of minority shareholders holding 9% shares who had filed complaints with SEBI, leading to the order in January 2021.

SEBI had issued several circulars for companies listed on regional stock exchanges, urging them to either re-list on a nationwide stock exchange (Bombay Stock Exchange Limited / NSE India / Metropolitan Stock Exchange of India Ltd.) following the derecognition of such regional stock exchanges or delist in case of their inability to get listed on a nationwide stock exchange.

Schneider, which was listed on Pune Stock Exchange and Bangalore Stock Exchange, interpreted the SEBI circulars to imply that a company on a de-recognized stock exchange could delist without making an effort to get listed on a nationwide stock exchange. However, SEBI contended that since the Company was already eligible to list on a nationwide stock exchange, it could not take advantage of the diluted delisting norms prescribed under the SEBI circulars. Consequently, the Company was directed to proceed with the listing or provide exit opportunities to its shareholders.

Initially, Schneider Electric had approached the High Court of Bombay in February 2021. The company sought directions to set aside the SEBI Order. However, the High Court of Bombay dismissed the writ petition on the grounds that challenging a SEBI order should be done before the Securities Appellate Tribunal.

Following this, Schneider Electric approached the Securities Appellate Tribunal but eventually decided to withdraw its appeal and agreed to comply with the SEBI Order completely.

Advocate Mr. Somasekhar Sundaresan with Mr. Sumit Agrawal, Mr. Amit Agrawal, Mr. Rushin Kapadia, Ms. Radhika Yadav, Mr. Pratham Darad and Mr. Tarun Toprani i/b Regstreet Law Advisors represented the minority shareholders of the Company.

The relevant orders have been enclosed for the readers.

Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com

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