Markets regulator Sebi on Thursday allowed Thomas Cook (India) to withdraw its buyback offer because of substantial deterioration in the company's financial position due to the COVID-19 pandemic.
The regulator treated the case as "unique" and said that the order is not intended to serve as a precedent.
In February 2020, the board of directors of the firm had approved the proposal for a buyback of up to over 2.6 crore shares, representing 6.9 per cent of the total paid-up equity share capital as on December 31, 2019, on a proportionate basis through the tender offer process.
Accordingly, the firm filed a draft letter of offer (DLOF) with Sebi.
However, in September 2020, the company had filed an application seeking withdrawal of the buyback offer.
As per the company, the COVID-19 pandemic resulted in its business being severely affected and the global lockdown measures had brought the tourism industry to a standstill.
It also made submissions regarding the financial impact of COVID-19 on its performance by referring to the disclosures made to the stock exchange for the quarter ended June 30, 2020.
Subsequently, Sebi considered the withdrawal application of the firm and its submissions.
As per the Companies Act, 2013, every buyback needs to be completed within one year from the date of passing of the special resolution at a general meeting, or the resolution passed by the board of directors of the company.
"It is a settled legal position that when the fulfilment of a condition prescribed by law, though mandatory, becomes impossible to be complied with because of an act of God or otherwise, the law will excuse the fulfilment of that condition. Law can never insist upon the performance of an act which has otherwise become impossible of performance," Sebi said.
It cannot be disputed that the COVID-19 pandemic has now made it impossible for Thomas Cook (India) to go ahead with the buyback offer and such impossibility had occurred without any fault of the company and was also beyond its control, it added.
"The DLOF filed with Sebi is not performable and if compelled to be performed by TCIL, will result in an adverse effect on the business of the Company and in turn, its shareholders," the regulator said.