acquisition – exemption

https://www.sebi.gov.in/enforcement/orders/feb-2020/exemption-order-under-regulation-11-of-sebi-sast-regulations-2011-in-the-matter-of-mps-limited_45985.html

Note on Exemption Order under Regulation 11 of SEBI (SAST) Regulation, 2011 in the matter of MPS Limited:-

  • Target Company: MPS Limited.
  • Acquirer’s: Nishita Arora Family Trust (NAFT) and

Neha Family Trust (NFT).

  • As per the application made to SEBI for granting exemption under regulation 11, it states that ADI BPO Services Limited (ADI BPO) is the promoter of the Target Company and holds 67.77% of shares in the Target Company.
  • Also ADI Media Private Limited (ADI Media) holds 8.43% of shares in ADI BPO.
  • Both Nishith Arora and Anju Arora are the promoters of ADI BPO and ADI Media. In order to facilitate succession planning, Nishith Arora has created Acquirer Trust 1 to streamline family’s shareholding in ADI BPO. Further, Nishith Arora and Anju Arora have also created Acquirer Trust 2 to streamline family’s shareholding in ADI Media.
  • Proposed acquisition involves settlement of equity shares of ADI BPO which constitutes 90.72% stake held by Nishith Arora to the acquirer trust 1 and also the settlement of equity shares of ADI Media which constitutes 99.99% stake held by Nishith Arora and Anju Arora to the acquirer trust 2.
  • Also the shares of ADI BPO and ADI Media would be transferred without any consideration.
  • The proposed acquisition of the Target Company by the acquirer’s will results into indirect acquisition of control over the target company.
  • Grounds on which the application was made to seek exemption under regulation 11 is as under:-
    • The settlement of shares held by the settlers in the respective acquirer trust will take place with respect to a private family arrangement.
    • Also regulation 10 provides for exemption from making an open offer in case of such type of indirect acquisition.
    • Proposed indirect acquisition is a non- commercial transaction which will not affect the interest of public shareholding of Target Company.
    • There shall be no real change in the shareholding and control of the  Target Company through acquirer.
    • The propose settlement of shares held by promoters in ADI BPO and ADI Media is just an internal reorganization of target company. Further such transfer would not results into any increase or decrease in the holding of the promoter group of the Target Company.
  • Acquirer’s has made an application to SEBI and also provide confirmation to comply with the guidelines mention in SEBI circular dated on 22 Dec, 2017.
  • It is noted that there is no change in in the public shareholding and control of Target Company after the acquisition.
  • But the Target Company shall continue to be in compliance with the minimum public shareholding as required.
  • After considering the application made to SEBI and considering the above facts the SEBI has granted exemption under regulation 11 subject to certain conditions which are as follows:-
    • The proposed acquisition shall be in accordance with the requirements of Companies Act, 2013.
    • After the post-acquisition the acquirer shall file a report within 21 days.
    • The acquirer shall comply with the provisions of SEBI Circular dated on 22 Dec, 2017.
    • It is to be noted that the exemption granted as above shall be limited to the requirements of making open offer and shall not be construed as exemption from the disclosure requirements as per SEBI Regulations.

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s