SAT Slams Varun Beverages for Burying Deal Termination in Fine Print
Overview
The Securities Appellate Tribunal (SAT) ruled that material information disguised in fine print is not a valid disclosure. SAT allowed an appeal by Tanzania Bottling Company, setting aside SEBI's prior decision. SAT directed SEBI and NSE to re-evaluate whether Varun Beverages' termination of an acquisition agreement required a prominent announcement, not just a note in financial results.
Stocks Mentioned
SAT Cites 'Camouflaged' Disclosures as Non-Compliance
The Securities Appellate Tribunal (SAT) has declared that burying crucial information in fine print constitutes a failure to comply with SEBI's listing regulations. This strong stance came in an order pertaining to the Varun Beverages Ltd (VBL) case.
Tribunal Overturns SEBI Decision in TBC Appeal
In an order dated January 9, 2026, SAT upheld an appeal filed by Tanzania Bottling Company S.A. (TBC). This action set aside a July 2, 2025 communication from SEBI, which had previously rejected TBC's complaint lodged via the SCORES platform. SAT has now mandated that SEBI and the National Stock Exchange must reinvestigate whether the termination of a significant transaction warranted mandatory disclosure under the LODR Regulations, with fresh orders due within four weeks.
Dispute Over Acquisition Agreement Termination
The core of the dispute revolves around the termination of a share purchase agreement (SPA). Under this pact, Varun Beverages Ltd had proposed to acquire 100 per cent of SBC Tanzania Ltd, a subsidiary of TBC. SAT acknowledged that VBL had made a clear disclosure when its board approved the SPA in November 2024.
Termination Hidden in Notes, Not Announced
However, the agreement ultimately failed to meet its stipulated conditions and was terminated after its long-stop date. Crucially, no equivalent, prominent disclosure was made to the stock exchanges regarding this termination. Instead, the information was relegated to a note within the unaudited financial results for the quarter ended March 31, 2025.
'No Disclosure At All,' SAT States
The tribunal unequivocally labeled this approach as unacceptable, stating the information was effectively hidden. "A careful reading shows that the SPA approval was disclosed in a conspicuous manner, whereas the termination does not find place in the main disclosure or board outcome. It is camouflaged in the notes, that too in small print. In our view, this is no disclosure at all," the SAT order stated. SAT emphasized that investor decisions and share valuations are heavily reliant on timely and transparent disclosures about a company's ventures and risks. Material events, it stressed, must be presented clearly and conspicuously, not buried in annexures or explanatory notes.
Tax Burden and Regulatory Scrutiny
SEBI's assertion that disclosures made on March 31 and April 30, 2025, were sufficient was rejected by SAT, which found the regulator had not examined the issue correctly. SAT also noted that TBC's complaints on SCORES and the Market Intelligence platform had not been adequately considered. Following the lack of a clear confirmation of termination from VBL, the Tanzania Revenue Authority proceeded as if the transaction was completed, initiating enforcement actions including freezing bank accounts. This compelled TBC to pay $4.26 million in capital gains tax.
