The Securities and Exchange Board of India (Sebi) has, prima facie, not found any violation of norms relating to takeover and corporate governance in its preliminary surveillance of the deal involving the acquisition of Maytas Infra by Satyam Computer Services.
Thus, sources close to the development said, there was no need for a formal investigation. Instead, the market regulator would probe the deal under Sections 370 and 372 of the Companies Act.
Therefore, the probe would be limited to the deal between the two listed entities -- Satyam and Maytas Infra -- and not cover the one involving Satyam and unlisted firm Maytas Properties.
Section 370 of the Companies Act deals with loans to companies under the same management. Under this Section, a company could not give loans or any form of guarantee to companies under the same management unless it has been approved by a special board resolution. Section 372 deals with purchase of shares of one company by another.
These purchases, sources said, are governed by certain restrictions imposed by the board of the company at the time of its inception and copies of this document are submitted to the market regulator and the Department of Company Affairs.
Sources said the probe is intended to find out if there has been any substantial purchase or sale of shares between the group companies over a two-to-three month period.
"Even if prima facie it seems that there has been no violation, one needs to check if the loans and investments made into the group companies are supported by any clause that the same could get converted into equity, or any other form of control, later," said the source.
Further, the market regulator proposes to check if the companies had made the required disclosures to stock exchanges before such proposal was announced.
Reportedly, institutional investors had strongly objected to the fact that the acquisition decision, which the company had conveyed to the Bombay Stock Exchange (BSE) after trading hours, was not communicated to shareholders first.
Last week, Satyam had announced its plan to acquire two companies - Maytas Infra (51 per cent) for around Rs 6,240 crore (Rs 62.40 billion) and Maytas Properties (100 per cent) for Rs 1,440 crore (Rs 14.40 billion). However, a day after the announcement, the company reversed its decision amidst strong opposition from its shareholders.