sebi:CO/33/TO/05/2003

SEBI · SEBI · G.N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

Exemption granted from Regulation 10 open offer requirement for the Target company (NRB Bearings Ltd) subject to conditions (special resolution by postal ballot, Nadella abstaining, prepaid postal ballot envelope); application for exemption regarding SNL disposed of as Regulations 10 and 12 not attracted in respect of SNL.

Regulations

• Reg. 4
• Reg. 6
• Reg. 11
• Reg. 3
• Reg. 10
• Reg. 12
• Reg. 44
• Reg. 2(1)(b)
• Reg. 2
• Reg. 199
• Reg. 2(1)(k)
• Reg. 42
• Reg. 4(6)
• Reg. 2(2)
• Reg. 2(1)(o)

Holding

The Acquirer would trigger Regulation 10 in respect of the Target company (NRB Bearings Ltd) on account of the proposed indirect acquisition of 26% shares/voting rights through acquisition of voting securities of Nadella from IR, but would not trigger Regulations 10 and 12 in respect of SNL. Exemption from Regulation 10 was granted for the Target company subject to a special resolution being passed by shareholders via postal ballot.

Full text

3.6 The Sahney family "controls’’ the Target company and conducts the day to day management and operations of the Target company . The Acquirer believes that Nadella does not control the Target company , within the meaning of such expression as defined in the Regulations. The Acquirer believes that the proposed Acquisition will not result in the Acquirer acquiring control over the Target company . 3.7 The expression "shares" is defined in Regulation 2(1)(k) of the Regulations to mean shares in the share capital of a company. The expression "company" is not defined in the Regulations. Pursuant to Regulation 2(2) of the Takeover Regulations, the expressions not defined in the Regulations have the same meaning as have been assigned to such expressions under the Securities and Exchange Board of India Act, 1992, or the Securities Contracts (Regulation) Act, 1956, or the Companies Act, as the case may be. The expression "company" is defined in the Companies act to mean a company formed and registered under the Companies Act or an existing company as defined in clause (ii) of Section 3 of the Companies Act. It is important to note that the Companies Act uses the expression "body corporate" for a corporation or a company incorporated outside India. 3.8 The Acquirer believes that Regulation 10 only applies to the acquisition of shares or voting rights in a company and not to the acquisition of voting securities of a body corporate. The Acquirer also believes that pursuant to the Expla

The said application dated December 20, 2002 was forwarded to the Takeover Panel in terms of sub-regulation(4) of regulation 4 of the Regulations. The Takeover Panel vide its report dated January 23, 2003 has recommended, inter alia, as under : "Considering the pith and substance of Regulations 10 and 11 of the Takeover Code as also the spirit under lying the Takeover Code, even though Nadella is not incorporated under the Companies Act, 1956, in our view, on facts stated, Regulation 10 of the Takeover Code applies to the proposed acquisition. Nadella has voting rights in NRB Bearings Ltd. With a view to protect the interest of the investing public, the grant of exemption as sought is recommended subject to the shareholders of NRB Bearings Ltd : i. Passing a Special Resolution ratifying the change at its meeting whereat voting through postal ballot is to be permitted; ii. Serving notice of such meeting to the shareholders of NRB Bearings Ltd accompanying an envelope for postal ballot with prepaid postage stamps affixed. Grant of exemption is recommended also subject to Nadella, being interested party to the resolution, abstaining from voting in respect thereof. It is further recommended that the the Acquirer Company be directed to make fresh application for grant of exemption in relation to SNL Bearings depending upon outcome of the Special Resolution ."

Regulation 2(2) all other expressions unless defined herein shall have the same meaning as have been assigned to them under the Act or Securities Contracts (Regulations) Act 1956, or the Companies Act, 1956 or any statutory modification or re enactment thereto as the case may be. Regulation 10 (Acquisition of fifteen per cent or more of the shares or voting rights of any company) "No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by the persons acting in concert with him), entitle such acquirer to exercise [fifteen] percent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations". Explanation: For the purposes of regulation 10 and regulation 11, acquisition shall mean and include – a. direct acquisition in a listed company to which the regulations apply; b. indirect acquisition by virtue of acquisition of companies, whether listed or unlisted, whether in India or abroad" Regulation 12 (Acquisition of control over a company) "Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the Target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the regulations. Provided that nothing contained herein shall apply to any change in control which takes place

Source: SecMarx — sebi:CO/33/TO/05/2003. 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.