sebi:CO/503/TO/03/2003
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Facts / Headnote
Exemption granted from compliance with Chapter III of the Takeover Regulations for the proposed preferential allotment, subject to conditions
Regulations
- Reg. 4
- Reg. 3
- Reg. 3(4)
- Reg. 3(1)(c)
- Reg. 3(1)(i)
Holding
SEBI granted exemption to the Acquirers from complying with Chapter III of the Takeover Regulations with regard to the proposed preferential allotment of 20,00,000 equity shares (increasing shareholding from 23.23% to 34.99%), subject to conditions including shareholder approval by special resolution, specified disclosures, compliance with DIP Guidelines, postal ballot facility, and abstention by the Acquirers from voting.
Full text
5. The shares held by Punjab State Industrial Development Corporation (PSIDC) a State level financial institution will be transferred to the Acquirers pursuant to the Financial Collaboration Agreement entered into between the co-promoters in 1996. This transfer will be covered in regulation 3(1)(i) of the Regulations and the requisite report under regulation 3 will be sent to SEBI at the time of acquisition. 3.6 Being the promoters of the Target company, the Acquirers have provided funds to the Target company so that it could meet the stipulations of the Banks for sanction/ enhancement of their working capital limits. 3.7 The funds so given by the Acquirers to the Target company was reflected by it as share application money in its Books of Accounts. 3.8 That when the funds were given to the Target company, neither the number of shares to be issued in lieu of that amount nor the price of shares was contemplated. 3.9 That till date no shares have been allotted to the Acquirers against the said application money of Rs.500 lacs. 3.10 The Target company proposes to issue shares on preferential basis to the Acquirers against the sum so advanced by them. 3.11The investment was made by the Acquirers when the acquisition of shares on preferential basis was exempt under regulation 3(1)(c) of the regulations (i.e. before the amendments made in the regulations on 9.9.02).
examined by SEBI. 14.0 I have noted that the Panel has not given any recommendation as in its view the application of the Acquirers is premature. 15.0 I find that in the instant case the general meeting of shareholders of the Target company is yet to be convened by the Board of the Target company for getting the approval of the shareholders for the proposed preferential allotment in favour of the Acquirers. 16.0 In the facts and circumstances of the instant case, I find merit in the exemption application of the AcquireRs.I find that the aforesaid preferential allotment in favour of Acquirers, resulting in increase of shareholding of the Acquirers from 23.23% to 34.99% will not be detrimental to the interests of the public shareholders if the same is made pursuant to the consent of public shareholders of the Target company in the general meeting by way of resolution and the Acquirers being interested party abstain from voting in respect of the aforesaid resolution. 17.0 Taking into consideration the above, the recommendation of the Takeover Panel and the interest of the public shareholders of the Target company, in exercise of the powers conferred upon me under sub section (3) of Section 4 of the Securities and Exchange Board of India Act 1992( hereinafter referred to as "SEBI Act" ) read with sub regulation (6) of regulation 4 of the Regulations for the reasons recorded hereinabove, I hereby, grant exemption to the Acquirers from complying with the provisions as contained in
G.N. Bajpai Chairman Securities and Exchange Board of India Date: March 28, 2003 Place: Mumbai
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Source: SecMarx — sebi:CO/503/TO/03/2003. 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.