Following the objections and complaints from minority shareholders, the Securities and Exchange Board of India (SEBI) asked NSE on Monday to engage a valuer to conduct the valuation of related party transactions involving Linde India and Praxair India. NSE is required to communicate the value report with SEBI and the company. The regulator issued an interim order requiring Linde to present the valuation study to the audit committee and board of directors within two weeks of receiving it.
Following shareholder concerns, the Securities Appellate Tribunal ordered the National Stock Exchange (NSE) to appoint a valuer to undertake the valuation of related party transactions (RPTs) between LIL and PIPL. This ruling overturned SEBI’s interim order.
The legal opinions that LIL sought were part of a desperate attempt, as directed by Sebi, to overcome the vote of the shareholders. It further stated that a valuation study would have revealed whether the decision needed the consent of the entire shareholder body or just the audit committee.
In its order, Sebi has directed NSE to appoint a registered valuer to conduct a valuation of the business foregone and received, including geographic allocation, under the joint venture and shareholder agreement given by Linde India and Praxair India, which emerged in the formation of Linde South Asian Services.
Furthermore, Sebi has directed Linde India to reimburse NSE for the expenses incurred in carrying out the valuation and to test the materiality of future RPTs using the norms’ threshold based on the aggregate value of transactions entered into with any related party within a fiscal year, regardless of the number of transactions or contracts involved and if the total value of related party transactions (RPTs) exceeds the materiality threshold, shareholder approval is required.
Additionally, the regulator gave NSE instructions to give the value report to the company and Sebi. Linde has two weeks from the date of receipt to provide the report to the board of directors and audit committee.
Linde India must now provide a summary of the valuation report’s findings, as well as management responses on the stock exchanges.
