sebi:WTM/PS/11/CFD/DCR-I/JULY/2013

SEBI · SEBI · 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

Exemption granted from open offer requirements under regulation 3(1) of the Takeover Regulations, subject to conditions

Provisions invoked

• s. 19

Regulations

• Reg. 3
• Reg. 3(1)
• Reg. 3(2)
• Reg. 11(5)

Holding

SEBI granted exemption to the five Trusts (Acquirers) from the obligation to make an open offer under regulation 3(1) of the Takeover Regulations in respect of their proposed indirect acquisition of 2,73,62,21,862 equity shares (70.30%) of GMR Infrastructure Limited through the gift transfer of GHPL shares, subject to conditions including completion within 30 days and filing a report within 21 days.

Full text

Page 2 of 8 maintenance of the family of Mr. G. Mallikarjuna Rao consisting of his children, their spouses and their bloodline descendants ("the GMR family"). c) As on the date of the application, GHPL holds 2,73,62,21,862 equity shares of the Target Company constituting 70.30% of the equity share capital. The promoter and promoter group (including GHPL) of the Target Company together hold 71.43% of the equity share capital of the Target Company. d) The equity shares of GHPL are only held by Mr. G. Mallikarjuna Rao (99.997%) and Mrs. G. Varalakshmi (0.003%). It is proposed that 100% of the equity shares of GHPL held by Mr. G. Mallikarjuna Rao and Mrs. G. Varalakshmi ("the transferors") would be transferred by way of gift in the following manner : (i) 7,55,061 equity shares constituting approximately 25% of the paid up equity share capital of GHPL to each of the following Trusts – GVMR Trust, SBR Trust, GBSRSS Trust and GKKR Trust ; and (ii) 3 shares to the GMR Family Fund Trust. (All the aforesaid 5 Trusts would be collectively referred to as the Acquirers)

Page 3 of 8 g) As GHPL holds 70.30% of the shares and voting rights of the Target Company, the transfer of 100% of shares of GHPL to the Acquirers as trustees would result in the indirect acquisition of voting rights in the Target Company to the extent of 70.30% by the Acquirers in their capacity as trustees of the Trusts. Together with persons acting in concert (i.e. rest of the members of the promoter and promoter group of the Target Company) the Acquirers in their capacity as Trustees of the Trusts would directly and indirectly hold 71.43% of the voting rights of the Target Company. h) As on date of the application, the GVMR Trust, SBR Trust, GBSRSS Trust and GKKR Trust together hold 4000 equity shares of the Target Company constituting 0.0001% of the equity share capital of the Target Company and persons acting in concert with them hold more than 25% of the voting rights in the Target Company. Consequently, the proposed indirect acquisition would attract the provisions of regulation 3(2) of the Takeover Regulations and would be in excess of 5% of the voting rights of the Target Company.

Page 4 of 8 the Target Company together with the other transferors and there will consequently be no change in, or acquisition of, control or management of the Target Company pursuant to the proposed settlement by way of gift of shares to the Trusts. (iv) In any event, since the Trusts have been set up for the benefit of the members of the GMR family, the Trustees of the Acquirers will exercise control only as part of the GMR family. Therefore, regardless of whether the Acquirers exercise control in their personal capacity or as trustees, the GMR family would continue to be in control of the Target Company. (v) There will be no change in the promoter group of the Target Company pursuant to the proposed settlement by way of gift of shares of GHPL to the Trusts. The change in the identity of persons who will indirectly exercise voting rights over the Target Company through GHPL will only be between persons who, in their personal capacity, are promoters of the Target Company. (vi) The indirect acquisition for which exemption is sought will not affect or prejudice the interests of the public shareholders of the Target Company in any manner. There will be no change of control, management, promoter group or shareholding of the Target Company pursuant to the proposed indirect acquisition.

Source: SecMarx — sebi:WTM/PS/11/CFD/DCR-I/JULY/2013. 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.