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08 Aug, 2025
The Securities and Exchange Board of India (Sebi) has mandated Religare Enterprises (REL) to seek approvals to proceed with the Burman family's open offer, marking a setback for REL's management, led by chairperson Rashmi Saluja. REL is required to apply for necessary approvals from the Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (Irdai), and Sebi by July 12. The REL management had previously obstructed the Dabur promoters' open offer application for nine months, challenging their "fit and proper" status.
A spokesperson for the Burman family emphasized their commitment to completing the open offer for the benefit of REL's public shareholders. Following Sebi's order, REL will apply to the relevant regulators for the acquirers' fit and proper status, as stated by an REL spokesperson on Thursday. Shares of REL increased nearly 4%, closing at Rs 233.4.
Sebi issued this latest order after the REL board ignored previous directives to initiate the open offer process. Sebi asserted that surpassing the 25% shareholding threshold obliges the acquirer to make an open offer for an additional 26%. The regulator emphasized that shareholders' rights to exercise this option should not be obstructed by the existing management, particularly when there is apparent hostility and conflict of interest.
Entities owned by the Burman family held a 21.54% stake in REL. Four entities purchased an additional 5.27% stake in September 2023, prompting a public announcement to launch an open offer for another 26%. Although the Burman family is the largest single shareholder in REL, they lack board representation.
Starting in October 2023, REL's board made multiple representations to Sebi against the Burman family's move to acquire more shares, citing the Burmans' alleged failure to meet the 'fit and proper' criteria for promoting a financial company with key licenses in insurance, lending, and broking.
Concurrently, the Burman family complained to Sebi about REL's lack of cooperation, which hindered their efforts to obtain regulatory approval and complete the open offer process.
On May 31, Sebi advised REL to apply to the RBI, Irdai, and Sebi for the required statutory approvals. REL's committee of independent directors responded, claiming Sebi's advice was "unwarranted, without jurisdiction, and resulted in regulatory overreach."
Sebi noted that the fit and proper criteria and REL’s allegations would be evaluated by each regulator during the open offer application process. Despite multiple opportunities, REL has not submitted any evidence supporting their claims.
Sebi has issued show-cause notices to REL, Saluja, and five others, questioning why they should not be barred from the securities market for alleged violations of Regulation 4(2)(f) of the LODR norms, which outline the responsibilities of the board of directors. Regulatory sources also indicated that Saluja is under investigation for alleged insider trading related to the proposed acquisition announcement.
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