MUMBAI, Mar 17: Shares gifted by the promoter of a listed company to a brother without monetary considerations would not trigger any open offer obligations for the new owner of equity, Sebi has said.
However, such an acquisition of shares should be by way of a gift involving an inter-se transfer amongst immediate relatives and without involving any acquisition price, the capital markets regulator has said.
The views have been expressed by Sebi (Securities and Exchange Board of India) in an interpretive letter sought under the regulator’s Informal Guidance Scheme by a listed company named OCL Iron & Steel Ltd.
Its promoter Garima Bildcorp Pvt Ltd is owned by three unlisted entities – Alconic Holdings, Allianz International and Dolphin Realtors – which in turn are controlled by Anjali Malhotra and Aarti Jain along with their relatives as persons acting in concert.
The promoters hold 75 per cent stake in OCL Iron and the remaining equity is held by public shareholders.
The company had sought to known from Sebi whether the transfer of all the shares held by Aarti Jain and Anjali Malhotra in the three unlisted companies by way of gift to their brother (who is not directly or indirectly part of the promoter group of OCL Iron & Steel or shareholder of any of the unlisted holding company) would trigger an open offer.
Any direct or indirect acquisition of shares amounting to 25 per cent or more stake in a listed company, or a control over the target company, triggers a mandatory open offer by the acquirer for public shareholders.
“In the instant case, by virtue of proposed acquisition, the brother together with persons acting in concerts would be acquiring indirect control over the Target Company,” Sebi said, adding that it would attract the provisions of its regulations governing mandatory open offer.
However, the transferors and transferee, being immediate relatives are qualified persons in terms of regulations that exempt inter-se transfer of shares amongst ‘immediate relatives’ from the obligation of making an open offer.
“It is mentioned in the application that the proposed acquisition by way of inter-se transfer will be done by way of gift which does not involve acquisition price,” Sebi said.
In view of this, Sebi said, the acquirer would be exempt from the obligation to make open offer subject to certain compliances applicable to the transaction.
The regulator also clarified that its present position is based on the representation made before it and “different facts or conditions might require a different result”. (PTI)
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