sebi:WTM/PS/14/CFD-DCR/OCT/2012

SEBI · SEBI · 2011-09-01 · Prashant Saran, Whole Time Member

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Facts / Headnote

Exemption granted from the requirements of Regulation 3(1) read with Regulation 3(3) of the Takeover Regulations for the proposed acquisition of 14,44,600 equity shares of Trent Limited, subject to conditions.

Provisions invoked

• s. 19

Regulations

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

Holding

SEBI granted exemption to Tata Sons Limited from complying with the open offer requirements under Regulation 3(1) read with Regulation 3(3) of the Takeover Regulations in respect of its proposed acquisition of 14,44,600 equity shares of Trent Limited by way of preferential allotment.

Full text

Page 2 of 6 promoter. It has been submitted by the Acquirer that all these entities are acting in concert under Regulation 2(1)(q)(1) of the Takeover Regulations. c) The Target Company had made a rights issue of Cumulative Compulsorily Convertible Preference Shares (hereinafter referred to as 'CCPS') comprising of two series i.e. CCPS Series A (converted into an equivalent number of equity shares of the Target Company on September 1, 2011) and CCPS Series B (to be converted into an equivalent number of equity shares on September 1, 2012) in August 2010. In the said rights issue, the Acquirer was allotted 12,28,374 CCPS Series A and 12,28,374 CCPS Series B. d) On March 16, 2012, the Target Company allotted 27,41,228 equity shares of the face value of ₹10 each, at a price ₹912 per equity shares, to certain qualified institutional buyers under the Qualified Institutional Placement (hereinafter referred to as 'QIP') category in accordance with the provisions of Chapter VII of the SEBI (Issue of Capital an Disclosure Requirements) Regulations, 2009 (hereinafter referred to as 'ICDR Regulations'), thereby increasing the total equity share capital of the Target Company from 2,45,08,291 equity shares of the face value of ₹10 each to 2,72,49,519 equity shares of the face value of ₹10 each. As a consequence of this, the voting rights of the Acquirer and the Promoter group have been diluted. e) It has now been proposed to issue 16,67,000 equity shares of the Target Company on preferenti

Page 3 of 6 by the Acquirer and the promoter group pursuant to the Proposed issue will not breach the ‘creeping acquisition’ limit of 5% under Regulation 3(2) of the Takeover Regulation. b) Until prior to the QIP in March 2012, the Acquirer's shareholding was in excess of the relevant 25% threshold and the provisions of Regulation 3(3) would not have been applicable to the Acquirer for the Proposed issue had it not been for the dilution of such holding due to the QIP. The dilution of the Acquirer's shareholding to that below the 25% threshold is as a result of a further issuance of shares by the Target Company and not a sale by the Acquirer. c) There will be no change in the control or management of the Target Company pursuant to the Proposed Issue. The Acquirer, together with the Promoter Group, is presently in control of the Target Company. d) Pursuant to the Proposed Issue, the public shareholding in the Target Company would still be in compliance with the minimum public shareholding requirements specified in Clause 40 A of the Listing Agreement. e) The acquisition of shares by the Acquirer shall not affect or prejudice, or be detrimental to, the interests of the public shareholders of the Target Company in any manner.

Page 4 of 6 shareholding occurred due to further issuance of capital by the Target Company and not due to sale of shares by the Acquirer. Hence, the breach of the threshold limit of 25% again on account of creeping acquisition by the Acquirer does not appear to be of much consequence in the facts and circumstance of the case. Against the aforesaid background, the Panel Members viewed the requirement of making open offer by Acquirer as merely a technical requirement and therefore preferred to recommend and exemption as requested by Acquirer.”

Source: SecMarx — sebi:WTM/PS/14/CFD-DCR/OCT/2012. 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.