SAT ticks off Sebi ruling on Tata Tea

 
Sebi had ruled that Tata Tea should pay the amount being paid as non-compete consideration to the promoters to other shareholders as well, who had tendered shares in the open offer, with interest at 10 per cent for the delay in making the payment.

In a similar case of Cementrum IB.V, SAT had set aside Sebi’s ruling, saying non-compete fee was not required to be paid to the public shareholders. Consequently, DSP Merrill Lynch, the merchant banker in the deal urged Sebi to follow the ruling to which the latter stated then that the Tribunal’s decision in Cementrum was case-specific.

But, in its ruling, SAT said,” An acquirer has a right to protect his investment/business from competition by a seller of the business...we are of the view that a non-compete agreement should then protect not only the target company but also its continuing shareholders.”