sebi:WTM/PS/CFD/26/SEPT/2011
Facts / Headnote
Exemption granted from the applicability of Regulation 11(1) of the Takeover Regulations with respect to the proposed increase in voting rights from 44.97% to 49.97% consequent upon the proposed buy-back of equity shares by the target company, subject to conditions.
Provisions invoked
- s. 19
Regulations
- Reg. 199
- Reg. 4(4)
- Reg. 11(1)
- Reg. 4(6)
Holding
SEBI granted exemption to the acquirers (promoter group) from complying with Regulation 11(1) of the Takeover Regulations with respect to the proposed increase in their voting rights from 44.97% to 49.97%, consequent upon the proposed buy-back of equity shares by the target company, subject to conditions.
Full text
Page 2 of 6 (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations). 2.2 From the application, the following have been noted: (i) The acquirers belong to the promoter group of the target company and hold 80,23,312 equity shares of the target company representing 44.97% of the total equity share capital. (ii) The target company proposes to buy-back a maximum of 17,84,162 equity shares represents 6.45%of the total paid up equity capital and free reserves of the company as on March 31, 2011 at a price not exceeding `130/- per equity share, from the open market through the stock exchanges. (iii) The aforesaid buy-back proposal has been approved through the board resolution dated July 09, 2011. (iv) During the financial year 2011-12, the promoters of the target company have acquired 8,90,000 equity shares representing 4.99% of the enhanced paid up share capital of the target company by way of allotment of shares pursuant to conversion of warrants, on June 16,
Page 3 of 6 (vi) The proposed buy-back by the target company would increase the voting rights of the acquirers to 49.97% thereby requiring them to comply with the requirements of Regulation 11(1) of the Takeover Regulations. The instant application has been made to seek exemption from open offer obligation, inter alia on the following grounds: a) There is no direct acquisition of shares or voting rights by the acquirers and the increase in the shareholding of the promoters (acquirers) from current holding of 44.97% to 49.97% is only incidental to the buy-back proposal of the target company on account of reduction in capital assuming successful buy-back of 17,84,162 shares. b) The public shareholding in the target company would be at a level more than what is specified in clause 40A of the listing agreement and the promoters’ holding would be below 50%. c) The price at which the buy-back is proposed is `130/- per share which is at a premium of `51.05/- per share and `50.85/- per share over the closing price at NSE and BSE respectively as on July 8, 2011 i.e. the day preceding the date of the Board meeting. d) At present the company has accumulated free reserve and satisfactory liquidity. The buy-back is being proposed by the company to maximize returns to investors and enhance overall shareholder value by returning surplus cash to the shareholders.
Page 4 of 6 Shareholders Category Before the proposed buy-back After the proposed buy-back No of Shares/ total voting rights held % of Shares/ total voting rights held No of Shares/ total voting rights held % of Shares/ total voting rights held Promoter Group (acquirers) 8023312 44.97 8023312 49.97 FIs/ Banks 0 0 0 0 Non Institutions 9818316 55.03 8034154 50.03 Total 17841628 100 16057466 100
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Source: SecMarx — sebi:WTM/PS/CFD/26/SEPT/2011. 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.