sebi:WTMO/TCN/CFD/12/June/2008

SEBI · SEBI · 2007-09-27 · T.C. Nair, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Exemption granted from making public offer under Regulation 11(2)

Provisions invoked

• s. 19
• s. 11B

Regulations

• Reg. 4
• Reg. 11
• Reg. 3
• Reg. 12
• Reg. 2
• Reg. 3(1)
• Reg. 11(2)

Holding

Exemption was granted to the acquirers from making a public offer under Regulation 11(2) for acquisition of 2.93% equity shares in the enhanced capital consequent to conversion of 18,00,000 warrants.

Full text

2 A. Acquirers belong to the promoter group of the target company and are holding 70.55% along with Mrs. Bhavana R Bbarot, Ridhima Doshi, Rajendra Barot (HUF), Ambalal Barot (HUF), Mitul Doshi who are persons acting in concert (PACs) with the acquirers. Presently, Mr Rajhoo Bbarot and Mr. Rikinn Bbarot hold 28,06,700 (17.22%) equity shares and 39,72,150 (24.37%) equity shares in the target company. Mr Rajhoo Bbarot is the managing director and Mr. Rikinn Bbarot is one of the directors of the target company. B. Pursuant to approval granted by shareholders of the target company by passing a Special Resolution in the Extraordinary General Meeting held for the purpose on 23.11.06, the Board of Directors of target company allotted 27,00,000 warrants convertible into 27,00,000 equity shares of Rs. 10/- each at a price of Rs. 317.50 per share to acquirers/promoters and to M/s Ellis Equity Advisors Pvt. Ltd., M/s Spotlight Securities Pvt. Ltd. M/s Winstar e-com Pvt. Ltd. (non- promoters) on 08.12.06 in compliance with the SEBI (Disclosure & Investor Protection) Guidelines, 2000, as per the following details:-

3 the said Guidelines. In terms of the issue of the convertible warrants, each of these warrants were convertible into one equity share of the target company at the option of respective allottees at any time within a period of 18 months from the date of allotment. In case of non exercise of option within the stipulated period of 18 months from the date of allotment of warrants the 10% amount paid on application shall be forfeited by the target company. The said period of 18 months will lapse on June 07, 2008. D. By virtue of conversion of all the aforesaid warrants into equity shares the shareholding of the promoter group in the target company was to come down to 70% from the existing 70.55% and in the notice of EGM sent to the shareholders of target company proposing the special resolution for the purposes of preferential allotment of said warrants this fact was disclosed.

4 e-com Pvt. Ltd.) the direction dated 22.02.07 continue to operate and have not been modified by the order dated 27.09.07. H. By virtue of interim order dated 22.02.2007, non-promoter allottees will not be able to convert their warrants into equity shares of the target company. In these circumstances, if the promoters (acquirers) exercise their option to convert the warrants, the promoter group holding will increase from existing 70.55% to 73.48% thus triggering the regulation 11 and 12 of the Takeover Regulations and the acquirers will have to make a public announcement to acquire shares in accordance with the provisions of the Takeover Regulations. 2.3 The acquirers have sought exemption under regulation 3 (1) (l) of the Takeover Regulations on the following grounds – (a). The acquirers belong to the promoter group of the target company and alongwith persons acting in concert they are holding 70.55% equity shares in the target company. They have always been in control and also continue to be in control of the target company. As a result of proposed acquisition of equity shares consequent to conversion of warrants, there will be insignificant change of 2.93% in the shareholding of the promoters group. Pursuant to such acquisition of equity shares there will not be any change in control of the target company and the acquirers alongwith other persons acting in concert in the promoter group, will continue to exercise control over the target company. The intention behind subscr

Source: SecMarx — sebi:WTMO/TCN/CFD/12/June/2008. 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.