sebi:WTM/KMA/CFD/48/03/2009

SEBI · SEBI · 2009-01-20 · K. M. Abraham, Whole Time Member

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Exemption granted from compliance with Regulations 11(1) and 11(2) of the Takeover Regulations for increase in shareholding/voting rights from 54.19% to 63.09% in Gitanjali Gems Limited pursuant to proposed buy-back, subject to conditions.

Provisions invoked

• s. 19

Regulations

• Reg. 4
• Reg. 3
• Reg. 11(1)

Holding

SEBI granted exemption to the acquirers (promoter group of Gitanjali Gems Limited) from complying with Regulations 11(1) and 11(2) of the Takeover Regulations with respect to the increase in their percentage shareholding and voting rights from 54.19% to 63.09% consequent to the target company's proposed buy-back of up to 1,20,00,000 equity shares.

Full text

Page 2 of 7 Limited, Priyanka Gems Private Limited, Rohan Diamonds Private Limited, Mozart Investments Private Limited, Digico Holdings Limited, Nihar Trading Private Limited and Trans Exim Limited. The aforesaid persons/entities are hereinafter collectively referred to as the acquirers. The target company stated that the acquirers are presently holding 4,60,94,283 equity shares representing 54.19% of voting rights of the target company. The target company proposes to buy back upto 1,20,00,000 equity shares at a price not exceeding Rs.120/- per share aggregating to a total consideration of Rs. 144 crores. In this process, if, 1,20,00,000 equity shares are bought back, the equity shareholding and voting rights of the acquirers would increase from 54.19% to 63.09%, and a public announcement would have to be made under the provisions of the Takeover Regulations, unless exemption is granted thereon. Hence, the exemption in respect of the above increase in shareholding/voting rights is sought inter alia on the following grounds: i) The Board of Directors of the target company in its meeting held on December 19, 2008 approved the buy back upto 1,20,00,000 shares of the target company. The buy back is proposed inter alia with the objective to improve the equity valuation, Earning per Share etc. ii) The acquirers are the promoters of the target company and as on the date of the application, they were collectively holding 4,60,94,283 equity shares representing 54.19% of the voting rig

Page 3 of 7 iii) In case of 100% response to the proposed buyback offer of the target company, assuming that 1,20,00,000 equity shares are bought back, the voting rights of the acquirers would increase from 54.19% to 63.09% of the voting rights of the target company.

Page 4 of 7 3.0 CONSIDERATION OF THE APPLICATION BY THE TAKEOVER PANEL 3.1 The aforesaid application was forwarded by SEBI to the Takeover Panel in terms of sub-regulation (4) of Regulation 4 of the Takeover Regulations. The Takeover Panel vide report dated January 20, 2009 recommended as under- “….as on 31/03/2008, the shareholding of the Promoters/Promoters Group was 49.62% which has increased by 4.57% due to purchases by them from open market till the date of this application. The present holding of the Promoters/Promoters Group which is now 54.19% may go further upto 63.09% consequent upon the proposed buyback. The Company has undertaken to buyback such number of equity shares which will not lead to increase in holding of Promoters/Promoters Group beyond 5% upto 31/03/2009. The panel took note of this undertaking and found the proposal to be in the interest of the public shareholders considering the maximum offer price of Rs.120/- per share as against the closing price of Rs.70.45/- on 29/12/2009 at both NSE and BSE. The panel therefore recommended the exemption subject to the Target Company complying with the relevant provisions of the Companies Act, 1956, SEBI Regulations and Listing Agreement.”

Source: SecMarx — sebi:WTM/KMA/CFD/48/03/2009. 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.