sebi:CO/164/TO/09/2002

SEBI · SEBI · 2002-07-25 · G.N. Bajpai, Chairman

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Facts / Headnote

Exemption granted from complying with Chapter III of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, subject to conditions

Regulations

• Reg. 4
• Reg. 11
• Reg. 3
• Reg. 20

Holding

SEBI granted exemption to the Acquirer from complying with Chapter III of the Takeover Regulations, including the obligation to make an open offer under sub-regulation (2) of regulation 11, for the proposed acquisition of 75,000 shares (7.49%) of Galaxy Leasings Limited, subject to conditions including individual offer letters to each remaining shareholder, registered acknowledgement due post, and an auditor's certificate of posting.

Full text

of sub-regulation (2) of regulation 11 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "Regulations"). 1.1 The shares of the Target company are listed on the UP Stock Exchange (hereinafter referred to as " UPSE") at Kanpur. 2.0 The Acquirer made an application dated July 25, 2002 supported by an affidavit dated July 29, 2002 to the Securities and Exchange Board of India (hereinafter referred to as SEBI) under sub-regulation (2) of regulation 4 of Regulations seeking exemption from making public offer and from compliance with the making of public announcement and provisions of Chapter III of the Regulations. 3.0 In the aforesaid application, the Acquirer submitted, inter- alia, the following: 3.1 The Acquirer and the persons acting in concert are holding 92.51% of the voting capital of the Target company. 3.2 The balance 7.49% shares of the Target company are held by public shareholders and the Acquirer along with persons acting in concert propose to acquire the aforesaid 7.49% shares from the public shareholders. 3.3 There are only 22 public shareholders in the Target company. 3.4 The Target company has been running in losses and it has not been paying any dividend and has accumulated losses to the extent of Rs.188.68 lacs as on 31.3.2001. 3.5 The shares of the Target company are not traded on UPSE since past 5 years. 3.6 The said offer will be made at price of Rs.2/- per share payable in cash. The shares of the Target c

3.8 The consideration will be paid to the public shareholders of the Target company by way of pay order / demand draft dispatched through registered post. 3.9 Since there are only 22 public shareholders of the Target company, it would be very convenient to complete the procedure and save cost. 3.10 On completion of the said offer the Target company shall approach the stock exchange for delisting of equity shares. 3.11 The Acquirer has requested that in view of the aforesaid

(iii) submitting of certificate of auditor / independent Chartered Accountant to the effect that the offer letters were so posted; and (iv) complying with other conditions as proposed in the application." 5.0 I have taken into consideration the application dated 25.7.2002 the material available on record and the recommendations of Takeover Panel. 5.1 I have noted that the shares of Target company are listed only at UPSE and have not been traded for last five years. The book value per share is nil as on 31.3.2001. 5.2 I have noted that the offer price of Rs.2/- per share to be paid to the public shareholders has been justified on the basis of parameters given in sub-regulation (3) of regulation 20. 5.3 It is observed that the Acquirer along with persons acting in concert are holding 92.51% shares of the Target company. That there are only 22 public shareholders in the Target company who hold 7.49% shares of the Target company. 5.4 I also note that the Acquirer has submitted that he is willing to write individually to the 22 public shareholders who hold 7.49% shares in the Target company and to purchase their shares at Rs.2/- per share payable in cash. 5.5 It is also noted that the Panel has recommended grant of exemption to the Acquirer subject to: making individual offers to each of the remaining shareholders by directly addressing Offer letters offering to buy the shares at the price of Rs.2/- per share; 1. 1.

Source: SecMarx — sebi:CO/164/TO/09/2002. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.