Exemption order under regulation 11(5) of SEBI (SAST) Regulations, 2011 by SEBI


WTM/GM/CFD/82/2019–20
SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER

UNDER SECTION 11(1) AND SECTION 11(2)(h) OF THE SEBI ACT READ WITH REGULATION 11(5) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011.

IN THE MATTER OF PROPOSED ACQUISITION OF SHARES AND VOTING RIGHTS IN –

TARGET COMPANY GLOBUS SPIRITS LIMITED

ACQUIRER YAMUNA FAMILY TRUST

BACKGROUND –

1. Globus Spirits Limited (“Target Company”) was incorporated under the Companies Act, 1956 on February 16, 1993. The Registered Office of the Target Company is at F-0, Ground Floor, The Mira Corporate Suites, Ishwar Nagar, Mathura Road, New Delhi-110065. The shares of the Target Company are listed on the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”).

2. An Application dated June 12, 2019 (“Application”) read with letter dated September 14, 2019 and email dated January 27, 2020 seeking exemption from the applicability of Regulations 3(1), 4 and 5(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) in the matter of proposed acquisition of shares and voting rights in the Target Company was received by SEBI from Mr. Ajay Kumar Swarup on behalf of Yamuna Family Trust (“Acquirer Trust/Applicant”).

3. Regulation 3(1), 4 and 5(1) of the Takeover Regulations 2011 states as under – “Substantial acquisition of shares or voting rights.

3. (1) No acquirer shall acquire shares or voting rights in a target company which taken together with shares or voting

rights, if any, held by him and by persons acting in concert with him in such target company, entitle them to exercise

twenty-five per cent or more of the voting rights in such target company the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.

Acquisition of control.

4. Irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.”

Indirect acquisition of shares or control.

5. (1) For the purposes of regulation 3 and regulation 4, acquisition of shares or voting rights in, or control over, any company or other entity, that would enable any person and persons acting in concert with him to exercise or direct the exercise of such percentage of voting rights in, or control over, a target company, the acquisition of which would otherwise attract the obligation to make a public announcement of an open offer for acquiring shares under these regulations, shall be considered as an indirect acquisition of shares or voting rights in, or control over the target company.”

4. In the aforementioned Application and subsequent submissions, the following was, inter alia, stated:

A. The shareholding in the Target Company as on September 30, 2019 was as under, -

TABLE I

SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION)

 

NAME

NO. OF SHARES

% SHAREHOLDING

A.

PROMOTER/ PROMOTER GROUP

1.

AJAY KUMAR SWARUP

19,00,588

6.60

2.

SURABHI BISHNOI & AJAY KUMAR SWARUP

(TRUSTEES REPRESENTING SURABHI BISHNOI FAMILY TRUST)

14,26,860

4.95

3.

ANOOP BISHNOI

1,92,960

0.67

4.

SHEKHAR SWARUP

729345

2.53

5.

BHUPENDRA KUMAR BISHNOI

90

0.00

6.

ROSHNI BISHNOI

90

0.00

7.

MADHAV KUMAR SWARUP

60

0.00


8.

MADHAVI SWARUP

60

0.00

9.

SAROJ RANI SWARUP

60

0.00

10.

CHANDBAGH INVESTMENTS LIMITED

1,12,93,153

39.22

11.

GLOBUS INFOSYS PRIVATE LIMITED

5,38,854

1.87

TOTAL PROMOTER HOLDING

1,60,82,120

55.84

B.

PUBLIC SHAREHOLDING

1,27,17,148

44.16

TOTAL

2,87,99,268

100.00

 As indicated in the above table, Chandbagh Investment Limited (“CIL”) and Globus Infosys Private Limited (“GIPL”) are promoter group entities of Target Company. The shareholding pattern of CIL and GIPL as on September 30, 2019 is given below, -

TABLE II

SHAREHOLDING IN CIL (SOURCE: APPLICATION)

Sl. No.

Name of the Shareholder

% shareholding

Remarks

1.

Mr. Ajay Swarup and Mrs. Madhavi Swarup

23.78

To be transferred to Mrs. Madhavi Swarup

2.

Mr. Shekhar Swarup

26.18

To be transferred to Mrs. Madhavi Swarup

3.

Northern India Alcohol Sales Ltd.

0.01

 

4.

Astral capital Pvt. Ltd.

50

 

5.

Mrs. Madhavi Swarup

0.01

Self-holding

6.

Mr. Madhav Swarup

0.01

To be transferred to Mrs. Madhavi Swarup

7.

Mrs. Saroj Rani Swarup

0.01

To be transferred to Mrs. Madhavi Swarup


TABLE III

SHAREHOLDING IN GIPL (SOURCE: APPLICATION)

Sl. No.

Name of the Shareholder

% shareholding

Remarks

1.

Mr. Ajay Kumar Swarup

51.50

To be transferred to Mrs. Madhavi Swarup

2.

Mrs. Madhavi Swarup

48.50

Self-holding

  1. Madhavi Swarup, Mr. Madhav Kumar Swarup, Mr. Ajay Kumar Swarup, Mr. Shekar Swarup and Ms. Devika Swarup, who are part of the promoter/promoter group of the Target

Company, have entered into a settlement agreement whereby they have agreed to gift their equity shareholding in the Target Company, CIL and GIPL to Mrs. Madhavi Swarup. Pursuant to said transfer by family members, Mrs. Madhavi Swarup’s shareholding in the Target Company will increase to 9.13%, in CIL to 49.99%, and in GIPL to 100% of the shareholding.

The shareholding of the Target Company pursuant to the said acquisitions is as under:

TABLE IV

SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION)

 

NAME

NO. OF SHARES

% SHAREHOLDING

C.

PROMOTER/ PROMOTER GROUP

12.

MADHAVI SWARUP

26,30,113

9.13

13.

SURABHI BISHNOI & AJAY KUMAR SWARUP

(TRUSTEES REPRESENTING SURABHI BISHNOI FAMILY TRUST)

14,26,860

4.95

14.

ANOOP BISHNOI

1,92,960

0.67

15.

BHUPENDRA KUMAR BISHNOI

90

0.00

16.

ROSHNI BISHNOI

90

0.00

17.

CHANDBAGH INVESTMENTS LIMITED

1,12,93,153

39.22

18.

GLOBUS INFOSYS PRIVATE LIMITED

5,38,854

1.87

TOTAL PROMOTER HOLDING

1,60,82,120

55.84

D.

PUBLIC SHAREHOLDING

1,27,17,148

44.16

TOTAL

2,87,99,268

100.00

  1. Pursuant to said acquisitions, Mrs. Madhvi Swarup will hold 9.13% of the shareholding of the Target Company; and due to transfer of shares of GIPL and CIL in her name, Mrs. Madhavi Swarup will acquire indirect control over 41.08% shareholding in the Target Company. In aggregate, Mrs. Swarup will be having direct and indirect control over 50.21% of the shareholding in Target
  2. Thereafter, in terms of the settlement agreement, Mrs. Madhavi Swarup will settle a trust (Yamuna Family Trust) and transfer the entire shareholding in the said companies held in her name, including the shares received in terms of the settlement agreement, to the trust for the benefit of the identified beneficiaries. No price shall be paid by acquirer trust for proposed acquisition of shares of Target Company, CIL and GPIL from Mrs. Madhavi
  3. Pursuant to the above-mentioned transfer by Mrs. Madhavi Swarup, aggregate of direct and indirect shareholding of Yamuna Family Trust in Target Company will be 21%.

The Settlor, Trustees and beneficiaries of the aforementioned Acquirer Trust are as under –

TABLE V

ACQUIRER TRUST – YAMUNA FAMILY TRUST (ACQUIRER 1)

SETTLOR

TRUSTEES

BENEFICIARIES

RELATIONSHIP

MRS. MADHAVI

MR. AJAY SWARUP

MR. AJAY KUMAR

Trustees                and beneficiaries are either part of promoter and promoter group of TC or    their       immediate relatives/lineal descendants

SWARUP

MRS. MADHAVI

SWARUP

 

SWARUP

MR. SHEKHAR SWARUP

 

 

LINEAL DESCENDANTS OF

 

 

MR. AJAY KUMAR

 

 

SWARUP AND MR.

 

 

SHEKHAR SWARUP


The shareholding in the Target Company subsequent to the proposed Acquisition by Yamuna Family Trust will be as under:

TABLE VI

PROPOSED SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION)

 

NAME

NO. OF SHARES

%       SHAREHOLDI

NG

A.

PROMOTER/ PROMOTER GROUP

1.

SURABHI BISHNOI & AJAY KUMAR SWARUP

(TRUSTEES REPRESENTING SURABHI BISHNOI FAMILY TRUST)

 

14,26,860

 

4.95

2.

ANOOP BISHNOI

1,92,960

0.67

3.

BHUPENDRA KUMAR BISHNOI

90

0.00

4.

ROSHNI BISHNOI

90

0.00

5.

CHANDBAGH INVESTMENTS LIMITED

1,12,93,153

39.22

6.

GLOBUS INFOSYS PRIVATE LIMITED

5,38,854

1.87

7.

YAMUNA FAMILY TRUST

26,30,113

9.13

TOTAL PROMOTER HOLDING

1,60,82,120

55.84

B.

PUBLIC SHAREHOLDING

1,27,17,148

44.16

TOTAL

2,87,99,268

100.00

5. Grounds for seeking exemption –

i. The Acquirer Trust is set up by the Promoter of the Target Company and would fall within the definition of the ‘Promoter Group’ under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“ICDR Regulations”) as the present Trustees and beneficiaries of the Acquirer Trust are the family members of the Promoters and their bloodline descendants. The proposed transfer of shares is a non-commercial transaction which will not prejudice the interest of the public shareholders of the Target Company

ii. The proposed transfer of shares of the Target Company is not to any third party but to a private Family Trust whose Trustees and beneficiaries are the family members of the individual Promoters and their lineal descendants.

iii. The proposed settlement of equity shares in Yamuna Family Trust does not in any way result in a change in control or management of the Target Company

iv. There will be no change in the overall promoter shareholding in the Target Company pursuant to the proposed transfer of shares to the Acquirer Trust.

6. The Acquirer Trust (vide the Application read with letter dated. September 14, 2019 and email dated January 27, 2020) has confirmed its compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 –

i. The Trust is, in substance, only a mirror image of the Promoters’ holdings and consequently, there is no change of ownership or control of the shares or voting rights in the Target Company.

ii. Only individual promoters or their immediate relatives or lineal descendants are Trustees and beneficiaries.

iii. The beneficial interest of the beneficiaries of the Trust has not been and will not, in the future, be transferred, assigned or encumbered in any manner including by way of pledge / mortgage.

iv. In case of dissolution of the Trust, the assets will be distributed only to the beneficiaries of the trust or to their legal heirs.

v. The Trustees will not be entitled to transfer or delegate any of their powers to any person other than one or more of themselves.

vi. Any change in the trustees / beneficiaries and any change in ownership or control of shares or voting rights held by Trust shall be disclosed within two days to the concerned stock exchanges with a copy endorsed to SEBI for its record.

vii. As far as the provisions of the SEBI Act and the regulations framed thereunder are concerned, the ownership or control of shares or voting rights will be treated as vesting not only with the Trustees but also indirectly with the beneficiaries.

viii. The liabilities and obligations of individual transferors under the SEBI Act and the regulations framed thereunder will not change or get diluted due to transfers to the Trust.

ix. The Trust shall confirm, on an annual basis, that it is in compliance with the exemption order passed by SEBI. The said confirmation shall be furnished to the company which it shall disclose prominently as a note to the shareholding pattern filed for the quarter ending March

31 each year, under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

x. The Trust shall get its compliance status certified from an independent auditor annually and furnish the certificate to the Stock Exchanges for public disclosure with a copy endorsed to SEBI for its records.

xi. The proposed acquisition is in accordance with the provisions of the Companies Act, 2013 and other applicable laws.

xii. The transferors are disclosed as promoters in the shareholding pattern filed with the Stock Exchanges for a period of at least three years prior to the transfer (except for holding on account of inheritance).

xiii. There is no layering in terms of trustees / beneficiaries in case of Trusts.

xiv. The Trust Deed does not contain any limitation of liability of the trustees / beneficiaries in relation to the provisions of the SEBI Act and all regulations framed thereunder.

CONSIDERATION –

7. I have considered the Application submitted by the Acquirer Trust and other materials available on record. Without reiterating the facts as stated above, the following is noted:

i. The Application submitted is in respect of the proposed acquisitions of shares and voting rights in the Target Company i.e. GLOBUS SPIRITS LIMITED. The proposed Acquisitions as detailed at paragraph 4C and 4F, which are to be made by YAMUNA FAMILY TRUST i.e. the Proposed Acquirer, will attract the provisions of Regulations 3(1), 4 and 5(1) of the Takeover Regulations.

ii. Pursuant to the proposed acquisitions, direct and indirect shareholding of Proposed Acquirer will increase from 0% to 50.21% and along with promoter group it will hold an aggregate of 55.84% of the paid up equity capital in the Target Company.

iii. There will be no change in control of the Target Company pursuant to the proposed acquisition, as stipulated under the SEBI Circular dated December 22, 2017.

iv. The pre–acquisition and post–acquisition shareholding of the Promoters in the Target Company will remain the same.

v. There will also be no change in the public shareholding of the Target Company.

vi. The Target Company shall continue to be in compliance with the minimum public shareholding requirements under the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

vii. The Proposed Acquirer has also confirmed that it is in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017. Further, the Acquirer Trusts have undertaken to execute amendments in the Trust Deeds in this regard..

8. Considering the aforementioned, I am of the view that exemption as sought for in the Application may be granted to the Proposed Acquirer, subject to certain conditions as ordered herein below.

ORDER –

9. I, in exercise of the powers conferred upon me under Section 19 read with Section 11(1) and Section 11(2)(h) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) and Regulation 11(5) of the Takeover Regulations, hereby grant exemption to the Proposed Acquirer, Yamuna Family Trust, from complying with the requirements of Regulations 3(1), 4 and 5(1) of the Takeover Regulations with respect to the proposed acquisitions in the Target Company, viz. GLOBUS SPRITS LIMITED, by way of proposed transactions as mentioned in the Application.

10. The exemption so granted is subject to the following conditions:

i. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws.

ii. On completion of the proposed acquisition, the Proposed Acquirer shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations 2011.

iii. The statements / averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirer are true and correct.

iv. The Proposed Acquirer shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed Acquirer shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017.

v. The Proposed Acquirer shall also ensure that the covenants in the Trust Deed are not contrary to the above conditions and undertaking provided by the transferors. In such case, the Trust Deed shall be suitably modified and expeditiously reported to SEBI.

11. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations 2011 and shall not be construed as exemption from the disclosure requirements under Chapter V of the aforesaid Regulations; compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015, Listing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other applicable Acts, Rules and Regulations.

12. The Application dated June 12, 2019 filed by Yamuna Family Trust is accordingly disposed of.

Place: Mumbai G. MAHALINGAM

Date: March 20, 2020 WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

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