Capital market regulator, the Securities and Exchange Commission (SEC), yesterday in a historic move reversed a controversial share deal carried out by Adam Investments PLC last week.
Accordingly, the SEC instructed the Colombo Stock Exchange (CSE) to cancel the sale of PC Pharma PLC shares by Adam Investments on August 7 with immediate effect and “to take all ancillary and incidental steps to preserve the status quo ante.”
Market sources said the divesture of PC Pharma shares by Adam Investments took place within a time period of 15 to 20 minutes in over 600 trades and the shares were bought by about five to six investors.
Thus, all the sale and resale of PC Pharma shares within that specified time period will be cancelled with immediate effect.
The SEC further said the cancellation of the said trade was done for the “protection of investors”.
Market stakeholders praised both the SEC and CSE for the vigilance they showed in this incident and the quick decision-making process to establish the status quo.
When inquired about the next course of action, SEC Chairman Dr. Nalaka Godahewa said the first step was suspending the trading of the relevant stocks and the next remedial action was reversing the trades which had taken place without following the proper procedure.
“The SEC is further investigating into the matter. If violations of specific provisions of the SEC Act or CSE rules are established, appropriate action will be initiated accordingly. We will however give fair hearing to all parties concerned,” Godahewa added.
Adam Investments on August 7 sold 31.4 million shares of PC Pharma, amounting to 31 percent of the issued share capital of the company, at prices ranging from Rs.2.10 to Rs.2.90 per share, while a mandatory offer was pending by the former on the latter at Rs.1.70 per share.
Adam Investments was supposed to forward a detailed mandatory offer document to all shareholders of PC Pharma on or before August 21, 35 days of incurring the obligation to make the mandatory offer.
Unconfirmed market sources told Mirror Business that despite the reversal of the share sale, Adam Investments is currently looking for other avenues to avoid the mandatory offer on PC Pharma, though there appears to be a very little likelihood for a move like that.
Adam Investments also announced a mandatory offer on PCH Holdings PLC on the same day it announced the mandatory offer on PC Pharma.
The trading of the PCH Holdings shares was also suspended yesterday seeking further information on the sale of a fully-owned subsidiary company. Both PCH Holdings and PC Pharma were earlier controlled by PC House fame S.H.M. Rishan.
Both companies are currently on the Default Board of the CSE for non-submission of March 2014 interim financial accounts.
Adam Investments also has a 40 percent stake in Orient Garments, a company previously controlled by Rishan.
Comments - 1
Sylvia Haik Saturday, 16 August 2014 10:46 AM
At long last SEC had initiated something creditable to justify their existence.
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