sebi:WTM/PS/12/CFD-DCR/APR/2016
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Facts / Headnote
Exemption granted to the acquirer (Agarwal Family Private Trust) from complying with regulations 3(1) and 3(2) read with 3(3) of the Takeover Regulations with respect to its proposed acquisition of 25.41% equity shares/voting rights in Gravita India Limited, subject to conditions; application dated March 19, 2015 disposed of.
Provisions invoked
- s. 19
Regulations
- Reg. 11
- Reg. 3(1)
- Reg. 2(q)
- Reg. 11(5)
Holding
SEBI granted exemption to Agarwal Family Private Trust from the obligation to make an open offer under regulations 3(1) and 3(2) read with 3(3) of the Takeover Regulations for its proposed acquisition of 25.41% equity shares in Gravita India Limited by way of gift/transfer from the promoters, subject to conditions including disclosure obligations and no dilution of liability.
Full text
Page 2 of 7 the Agarwal family’s equity shareholding in the target company. The proposed transaction would trigger regulation 3(1) of the Takeover Regulations. (d) The acquirer would be regarded as a person acting in concert with the promoters in terms of regulation 2(q) of the Takeover Regulations. (e) There is no fresh acquisition of shares and the total post-acquisition shareholding of the promoter group would remain at 73.34%. (f) The acquirer has sought exemption from the obligation to make an open offer under regulation 3(1) of the Takeover Regulations with respect to the proposed acquisition of 25.41% of equity shares from the transferors on the following grounds: i. The promoter shareholding in the target company is at 73.34% and the transferors are part of the promoter group. ii. The transferors together hold 17348025 equity shares comprising of 25.41% of the total paid-up capital of the target company. iii. The trustees and beneficiaries of the acquirer/Trust are family members of the transferors. iv. There will be no change in control in the target company. v. The proposed acquisition of 25.41% equity shares/voting rights is only a part of internal realignment of holdings within the Agarwal family and is a non- commercial transaction. Therefore, it will not prejudice the interest of the public shareholders of the target company. vi. Pursuant to the proposed transaction, instead of directly exercising voting rights, the transferors (being part of the promoter group)
Page 3 of 7 (b) Being a private trust, there is no complexity in the structure and will not lead to any transparency issues. (c) Being a private trust, there was very little room for change in trustees. However, for successor of trustees clause 18 was included in the trust deed. This clause provided that a successor trustee shall succeed to all of the title, powers, discretion and obligations of the discharged trustee. It stated that in the event of demise or incapacitation of Dr. Mahavir Prasad Agarwal, a list of family members (in order of priority) was provided who would be appointed as successor individual trustee along with Mr. Rajat Agrawal. The clause also provided the list of persons who would be appointed in the event of demise or incapacitation of Mr. Rajat Agarwal or both Dr. Mahavir Prasad Agarwal and Mr. Rajat Agarwal. According to the acquirer, there will be no change in control by change of trustees. (d) As promoters themselves are the trustees in the trust, there will be no change or dilution in control of the target company and hence the question of giving exit opportunity to existing investors of the company does not arise. (e) Regarding inheritance tax, the acquirer submitted that as on date there was no provision of any inheritance tax in India and therefore there was no question of saving on inheritance tax.
Page 4 of 7 4. In case, the Trust introduce any outsider (i.e. other than the family members and their descendants), the Trust shall comply with the disclosure requirements under the relevant provisions of the SEBI (SAST) Regulations, 2011 as may be applicable.”
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Source: SecMarx — sebi:WTM/PS/12/CFD-DCR/APR/2016. 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.