sebi:WTM/PS/36/CFD-DCR-1/MAR/2013
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Facts / Headnote
Exemption granted from complying with Regulation 3(2) of the Takeover Regulations, subject to conditions
Provisions invoked
- s. 19
- s. 77A
- s. 53
Regulations
- Reg. 3(2)
- Reg. 10(4)(c)
- Reg. 11(5)
Holding
SEBI granted exemption to the promoters of Prima Industries Limited from complying with the open offer requirements under Regulation 3(2) of the Takeover Regulations in respect of the increase in their voting rights from 60.13% to 71.36% pursuant to the forfeiture of 20,16,100 equity shares held by defaulting shareholders.
Full text
Page 2 of 5 pay the balance amount and informed that the shares would be forfeited if they fail to pay, by the Target Company. c. In response to such letters, certain shareholders, have paid the outstanding amount and made the shares fully paid up. Despite the final reminder, shareholders holding 20,16,100 equity shares for ₹1,00,80,500 have failed to make the shares fully paid up. Therefore the Board of Directors of the Target Company decided to forfeit the shares of those shareholders who defaulted. d. After the proposed forfeiture, the percentage of voting rights of promoters would increase from 60.13% to 71.36% .
Page 3 of 5 terms of the proviso to Regulation 11(5) of the Takeover Regulation. After examination of the facts and circumstances stated in the application, the Panel, vide report dated November 27, 2012 recommended as under- "It was observed by the Panel that the Target Company had issued letters dated 16.12.2011, 13.01.2012 and 30.03.2012 to the shareholders for making the balance payment but there was no response from the shareholders. Considering the fact that the Target Company has given adequate opportunity to the shareholders to make good the default in making the balance payment towards calls in arrears as also, that there is no direct acquisition by the promoters and the case is quite similar to the case of a buy back (which is exempted under regulation 3(2) subject to certain conditions), the Panel decided to recommend exemption as requested by the applicants. The exemption may be granted subject to the condition that the Target Company and the applicants (promoters) shall ensure that the forfeiture is in accordance with the Article of Association of the Target Company and relevant provisions of the Companies Act, 1956."
Page 4 of 5 7. I note that there is no direct acquisition of voting rights or shares in the Target Company by the promoters and the increase in percentage of voting rights will be on account of forfeited shares of the Target Company. The said shares would be forfeited in the interest of the Target Company and its shareholders in accordance with the provisions of the Articles of Association and the Companies Act, 1956. I note that the Board of the Target Company, while authorising the forfeiture, had also provided for a notice to be given to the defaulting shareholders before effecting the forfeiture. Further, I notice that the defaulted shareholders, to whom the notices of forfeiture have been dispatched are the resident Indians and the notices have been dispatched to their addresses in India as per the Register of Members available with the Target Company. The Target Company has also submitted that it has complied with procedure laid down in Section 53 of the Companies Act, 1956.
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Source: SecMarx — sebi:WTM/PS/36/CFD-DCR-1/MAR/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.