Prannoy and Radhika Roy of NDTV have said they would not be able to transfer the shares the Adanis have sought, citing certain regulatory restrictions.

The Adanis want the shares in RRPR Holdings Pvt Ltd, the company which holds a 29.18 per cent stake in NDTV, transferred to their Vishvapradhan Commercial Private Ltd (VCPL).

On Thursday, the Roys said a Securities and Exchange Board of India (Sebi) order issued in 2020 barred them from buying or selling shares in India’s securities market.

As a consequence, they could not transfer shares of RRPR to VCPL — the unlisted company that holds a string of protective rights in the form of share warrants and call options linked to a Rs 350-crore loan that was extended to the Roys in June 2009.

The Adanis are yet to respond to the Roys’ stand.

On Tuesday, Gautam Adani had acquired VCPL for an enterprise value of Rs 113.74 crore from two companies belonging to Mahendra Nahata, who is recognised as one of the early pioneers of mobile telephony services in India.

Immediately after the acquisition of VCPL — spearheaded by its media arm, AMG Media Networks Ltd (AMNL) — the Adani group pressed for the conversion of the warrants held by the firm into equity in RRPR, effectively seeking to obtain indirect control of 29.18 per cent of NDTV.

The Adanis had served a notice on the Roys to transfer the RRPR shares within two days — a deadline that passed on Thursday.

In a regulatory filing, the Roys said they were prohibited by the 2020 Sebi order from trading in Indian markets until November 26, 2022, after an investigation found they made wrongful gains linked to suspected insider trading of NDTV shares.

“Sebi approval is necessary for the proposed acquirer to secure 99.5 per cent interests in the promoter group vehicle (RRPR), since this would consequently lead to acquisition of voting rights in respect of 29.18 per cent of the issued share capital of the target company (NDTV) held by the promoter group vehicle,” NDTV’s regulatory filing said.

Some analysts feel the Roys are stalling until they work out a water-tight legal challenge against the Adanis who pushed the buttons for the conversion of RRPR share warrants without consulting the promoters of NDTV.

The Roys have been contesting the Sebi order before the appellate tribunal — and it is a little ironic that the regulatory restriction came in handy in the attempt to ward off the takeover threat from the Adani group.

“This seems like an effort by NDTV to stall or slow down the process. But other than causing a delay, it is unlikely to stop the acquisition from moving forward,” Pritha Jha, a partner at Indian law firm Pioneer Legal, told Reuters.

NDTV said that RRPR had instructed its bankers to return the Rs 1.99 crore deposited by VCPL (for exercising the warrants) on August 23. RRPR informed VCPL of the current position on Wednesday, it added.

The NDTV stock hit the upper circuit for the second consecutive trading session. The circuit breaker for the NDTV stock is set at 5 per cent — which meant that trading was frozen for the day.

The NDTV stock rose Rs 19.20 to close at Rs 403.70. Over the past year, the counter has gained by more than 435 per cent.

The surge in the stock price means that it will become harder for the Adanis to persuade shareholders of NDTV to hand in their shares in response to an open offer that has been priced at Rs 294 per share, aggregating to Rs 492.81 crore.

However, even if the Adani group succeeds in converting the shares in RRPR and gets an indirect stake of 29.18 per cent in NDTV, it will not be able to acquire control at least for now since the Roys in their personal capacity hold 32.26 per cent of the media firm.

The Adanis will not be automatically entitled to a board position at NDTV — if and when they gain control of the RRPR stake in the television channel – but will have sufficient heft to block resolutions and press for a new slate of directors at the media house by moving a special resolution for an extraordinary general meeting. A similar move was made by certain investors in Zee Entertainment Enterprises Ltd (ZEEL) last year but failed.

Under its erstwhile owners, VCPL had given the Roys the freedom to run the day-to-day operations at NDTV. The loan agreement of June 2009 specifically provided that VCPL would have no right to interfere in the editorial policies of NDTV.

“This is a very significant clause since this means that even if VCPL were to exercise the conversion option or purchase option, VCPL would not have any right in relation to the editorial policies of NDTV which, for a broadcaster lies at the heart of control,” the lawyers for NDTV had informed Sebi when they were contesting the market regulator’s showcause notice issued in December 2016 for violation of certain rules.