The markets regulator has questioned BSE’s alacrity in clearing the share capital reorganization of Future Group firms, as part of a $3.5 billion acquisition by Reliance Industries Ltd (RIL), despite four unresolved complaints against the deal, including one by Amazon.com Inc.
According to a 27 November notification issued by the Securities and Exchange Board of India (Sebi) that sought an explanation from BSE, the country’s oldest exchange gave its no-objection certificate to the Future Group companies on 6 November. Rival National Stock Exchange hasn’t cleared Future Group’s scheme of amalgamation.
“There are four complaints against Future Group companies and the (RIL) deal, which are registered under Sebi’s Scores mechanism. The regulator has sought clarification from the designate exchanges on these unresolved complaints,” a person aware of the matter said on condition of anonymity. Investor complaints against publicly traded firms and intermediaries are registered through the Scores online platform.
Spokespersons for BSE and NSE declined to comment on the matter, citing the sensitivity of the issue.
Amazon has written two letters to Sebi and the stock exchanges, urging the regulators not to clear the deal since it would disregard the Singapore International Arbitration Centre’s (SIAC) interim award, which has blocked Future Group from selling any assets or taking any step in this direction until a final verdict is pronounced by the arbitration court.
Amazon has said that Future Group has misled public investors through false information and breached corporate governance norms, allegations that have been denied by the Indian firm. Amazon has told Sebi that if the regulator approves the RIL-Future deal, it will not only mean disrespect for the SIAC but will also be detrimental to the interest of public shareholders and discourage foreign companies from forging alliances with local firms.
Future Retail has filed a counter lawsuit against Amazon in the Delhi high court to stop it from blocking the deal.
Six Future Group firms—Future Consumer Ltd, Future Enterprises Ltd, Future Market Networks Ltd, Future Lifestyle Fashions Ltd, Future Supply Chain Solutions Ltd and Future Retail—submitted their draft schemes of arrangement on 7 October to BSE, as the Kishore Biyani-led Future Group moved to consummate the ₹24,713 crore asset sale agreement with Reliance Industries.
Amazon has claimed that a 2019 stake purchase agreement with an unlisted Future Group company bars the latter from selling a stake in Future Retail without its consent. Amazon bought a 49% stake in Future Coupons Pvt. Ltd, which then acquired a 7.3% stake in Future Retail. The agreement also gave Amazon the right to increase its stake in Future Retail in the future.
But the pandemic-induced lockdown triggered a crisis at the Future Group, forcing it to enter into an agreement with Reliance Industries to sell its retail, wholesale and logistics assets. The deal was announced on 29 August.
Future Group and Amazon have been since blaming each other on various counts with regard to the legitimacy of the sale.
Future’s contention is that Future Retail and Future Coupons are separate companies and that Amazon should not interfere in the deal with Reliance Industries.
Future wants to pursue the case in two different ways because the deal with Amazon was entered into with Future Coupons, while the deal with Reliance Industries entails a sale of assets by Future Retail. The case in the Delhi high court is to secure approval for Future Retail to go ahead with the Reliance Industries deal. Simultaneously, both parties have agreed to continue their arbitration in Singapore.