sebi:WTM(TCN)/10/CFD/JUNE/08
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Facts / Headnote
Application for exemption disposed of - exemption refused
Provisions invoked
- s. 19
Regulations
- Reg. 4
- Reg. 5
- Reg. 4(2)
- Reg. 3(1)
Holding
SEBI disposed of the application dated November 28, 2007 and refused to grant the acquirers exemption from the Takeover Regulations for the incidental increase in voting rights from 54.99% to 63.47% consequent to the proposed buy-back offer of AksharChem (India) Ltd.
Full text
Page 2 of 8 77A, 77AA of the Companies Act 1956 and the provisions of the Securities and Exchange Board of India (Buy– Back of Securities) Regulations, 1998. Due to the said buy-back offer, the voting rights of the acquirers in the target company would increase from 54.99% to 63.47%, in case of 100% response to the said buy-back offer. 2.2 Shri Gokul M Jaykrishna (on behalf of all the acquirers), vide letter dated November 28,2007, filed an application with Securities and Exchange Board of India (hereinafter referred to as SEBI) under regulation 4(2) read with regulation 3(1) (l) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations,1997, (hereinafter referred to as the Takeover Regulations). The exemption is sought from the applicability of the provisions of the Takeover Regulations, inter alia on the following grounds:- a) The acquirers belonged to the promoter group of the target company and hold 54.99% of the share capital of the target company. The acquirers are in control over the target company. a) Increase in voting rights of the acquirers is incidental to the buy-back proposal of the target company. The said buy back proposal was made keeping the target company’s desire to maximize returns to investors. The proposed buy back is expected to lead to reduction of outstanding equity shares which may lead to increase in earnings per share and thereby creating long term share holder value. b) Even after buy-back of the equi
Page 3 of 8 c) The acquirers do not propose to acquire a single share of the target company either directly or indirectly. The increase in their shareholding in the target company is only incidental to the proposed buy-back offer assuming 100% response in the said buy-back offer. d) There would not be any change in the number of shares held by acquirers’ pursuant to the proposed buy back and that there would not be any change in control over the target company pursuant to the increase in the shareholding of the acquirers. The acquirers would not participate, directly or indirectly in the proposed buy back of the target company. 2.3 The shareholding pattern of the target company before and after the proposed buy back ( as mentioned in the application) is as under: Shareholders’ category Number of registered shareholders as on date of application Shareholding
Page 4 of 8 3.0 RECOMMENDATION OF THE TAKEOVER PANEL 3.1 The aforesaid application dated November 28, 2007 was forwarded by SEBI to the Takeover Panel in terms of sub-regulation (4) of Regulation 4 of the Takeover Regulations. The Takeover Panel vide report dated December 17, 2007 (received by SEBI on December 27, 2007) advised SEBI to obtain the following information from the acquirers
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Source: SecMarx — sebi:WTM(TCN)/10/CFD/JUNE/08. 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.