sebi:WTM/PS/30/CFD-DCR-1/MAY/2016
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Facts / Headnote
Exemption granted to the Government of India from the obligation to make an open offer under Regulation 3(2) of the Takeover Regulations, subject to conditions.
Provisions invoked
- s. 19
Regulations
- Reg. 11
- Reg. 11(1)
- Reg. 3(2)
- Reg. 200
- Reg. 11(5)
Holding
SEBI granted exemption to the Government of India from complying with the open offer requirement under Regulation 3(2) of the Takeover Regulations with respect to its proposed acquisition of 10,92,29,064 equity shares of Allahabad Bank by way of preferential allotment, which would increase its shareholding by around 5.83%.
Full text
Page 2 of 5 d. The Reserve Bank of India (hereinafter referred to as ‘RBI’) vide letter dated April 06, 2016, has permitted the Bank to treat the said capital infusion fund as a part of Common Equity Tier-1 (CET 1) Capital under Basel III norms as on March 31, 2016. e. The Target Company has convened an Extraordinary General Meeting on May 04, 2016 for seeking approval of the shareholders to issue and allot upto 10,92,29,064 new equity shares of face value ₹10 each of Bank to GoI at an issue price of ₹63.17. As the GoI would be acquiring more than 5% shares of the Bank in a financial year, the GoI had asked the Target Company to take all necessary steps/ approvals. f. As the entire issue is being made to the GoI, the major shareholder and promoter of the Bank, there would not be any change in control in the management of the Bank.
Page 3 of 5 5. I note from the letter dated March 28, 2016 (i.e. letter from the Ministry of Finance, GoI to the Target Company) that the GoI has decided to infuse capital to the tune of ₹690 crore in the Target Company, by way of preferential allotment of equity in favour of the GoI. The Target Company has submitted that pursuant to the said decision of the GoI, the Bank has received ₹690 crore and has held the same as Share Application money. I note that an Extra-Ordinary General Meeting of the shareholders of the Bank was convened on May 04, 2016 and the resolution to create, offer, issue and allot upto 10,92,29,064 equity shares of face value of ₹10 each for cash at an Issue Price of ₹63.17 in favour of GoI was approved subject to regulatory approvals.
Page 4 of 5 leverage to raise further equity capital at a later date as and when the need arises. I note that the capital adequacy of the Bank is a requirement to protect its small customers as well as the public shareholders who have invested in its equity. Further, there would be no change in the management control in the Target Company.
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Source: SecMarx — sebi:WTM/PS/30/CFD-DCR-1/MAY/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.