sebi:WTM/PS/07/CFD-DCR-2/MAY/2014

SEBI · SEBI · 2013-10-22 · Prashant Saran, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Application disposed of; exemption granted from Regulation 3(2) of the Takeover Regulations subject to conditions

Provisions invoked

• s. 19

Regulations

• Reg. 3(2)
• Reg. 10(1)(a)
• Reg. 2(1)(q)(2)
• Reg. 11(5)

Holding

SEBI granted exemption to the Nikhil Chaturvedi Family Trust from complying with the requirements of Regulation 3(2) of the Takeover Regulations with respect to its proposed acquisition of 1,40,50,955 shares of Prozone Capital Shopping Centres Limited by way of gift, subject to conditions.

Full text

Page 2 of 5 b. Mr. Nikhil Anupendranath Chaturvedi is partner in Topspeed Trading Company LLP and Floro Mercantile LLP, both of which are part of the promoter group of the Target Company and hold 3.15% (i.e. 48,00,000 equity shares of the Target Company) and 4.09% (i.e. 62,40,000 equity shares of the Target Company) respectively. The partners of Topspeed Trading Company LLP and Floro Mercantile LLP, vide respective resolutions both dated October 22, 2013, proposed to transfer their entire holding amongst the partners either in their individual names or family trusts, in the ratio of partnership interest of the respective partners. c. Accordingly, Mr. Nikhil Anupendranath Chaturvedi who holds 31.15% in the share capital of both the LLPs, gives him the entitlement of 14,95,200 shares and 19,43,760 shares of the Target Company from Topspeed Trading Company LLP and Floro Mercantile LLP respectively. d. Mr. Nikhil Anupendranath Chaturvedi has proposed to transfer his holding in the Target Company (in his individual capacity as well his entitlements in the two LLPs) to the Acquirer by way of a gift/ settlement of shares, as a part of the private arrangement intended to streamline the succession and welfare of the Nikhil Chaturvedi Family. e. Pursuant to the proposed transfer of shares, the Acquirer would be considered as part of the promoter group of Target Company. f. There will be no change in the shareholding pattern of promoter/ promoter group of the Target Company.

Page 3 of 5 a. The promoter shareholding of the Target Company is 34.62% and Mr. Nikhil Anupendranath Chaturvedi has been declared as a promoter in the disclosure made to SEBI and the Stock Exchanges. b. Mr. Nikhil Anupendranath Chaturvedi holds 9.21% of shares (i.e. 6.95% in individual capacity and 2.25% through entitlements in the LLPs) in the Target Company. c. The Acquirer and the Transferor are part of the promoter group of the Target Company. The Trustee and the beneficiaries of the Acquirer are family members. d. The shareholding of the Target Company after the proposed acquisition shall be same, except that the said 9.21% of the issued, subscribed and paid up capital of the Target Company shall be held by the Acquirer. e. The proposed gift of 9.21% of shares of the Target Company to Acquirer by Transferor is an internal reorganization within the Transferor's family. f. There will be no change in control or management of the Target Company after the proposed acquisition. g. The proposed acquisition is non-commercial and the same will not prejudice the interests of the public shareholders of the Target Company.

Page 4 of 5 6. I note that the Acquirer is a private trust settled by the Transferor, one the promoter of the Target Company and falls within the definition of 'promoter group' under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and the Acquirer would become part of the promoter group pursuant to the proposed acquisition. Therefore, the Acquirer would be regarded as a person deemed to be acting in concert with the promoters of the Target Company in terms of Regulation 2(1)(q)(2) of the Takeover Regulations. The total promoter shareholding in the Target Company is 34.62%. The shareholding of the promoter group excluding the shareholding of Mr. Nikhil Anupendranath Chaturvedi and his entitlements from Topspeed Trading Company LLP and Floro Mercantile LLP is 25.41%. Pursuant to the proposed transaction, the shareholding of the Acquirer would increase from 0.00% to 9.21%. The same would increase the shareholding of the promoter group (excluding the shareholding of Mr. Nikhil Anupendranath Chaturvedi and his entitlements from two LLPs) from 25.41% to 34.62%. The above increase from 25.41% to 34.62% is beyond 5% thereby triggering regulation 3(2) of the Takeover Regulations. I note that there would be no change in the management or control of the Target Company and the above proposed transaction would not affect or prejudice the interests of the public shareholders of the Target Company.

Source: SecMarx — sebi:WTM/PS/07/CFD-DCR-2/MAY/2014. 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.