SEBI | Public announcement of open offer exempted where share acquisition is a non-commercial transaction and part of a private family arrangement

Securities and Exchange Board of India (SEBI): The Board comprising G. Mahalingam as Whole Time Member, granted an exemption to a family trust from public announcement of an open offer for acquiring shares of one of its companies.

Supriyajith Family Trust (Acquirer) filed an application under Regulation 11(1) the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 seeking exemption from the applicability of Regulation 3 in the matter of proposed acquisition of shares in the Target Company (Suprajit Engineering Limited)

The proposed acquisition was a non-commercial transaction to be undertaken pursuant to a private family arrangement intended to facilitate a family succession plan of the promoters and to ensure seamless transition in the future.

It was noted that the proposed transfer was in no way prejudicial to the interests of the public shareholders and would not result in reduction in the holding of public shareholders in the Target Company. It would ensure that there are no future conflicts in ownership pertaining to the promoter shareholding and such stability would, in fact, be in the interest of Target Company and all its stakeholders and shareholders.

Further, there would be no new acquisition of shares by the promoters group and the pre-acquisition and post-acquisition shareholding of the promoter group in the Target Company would remain the same.

In view of the above, the Board granted an exemption to the proposed Acquirer – Supriyajith Family Trust, from complying with the requirements of Regulation 3(1) of the Takeover Regulations with respect to the proposed acquisition/exercise of voting rights in respect of the Target Company, viz. Suprajit Engineering Limited.[Suprajit Engineering Ltd. v. Supriyajith Family Trust, 2019 SCC OnLine SEBI 14, Order dated 07-03-2019]

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