Sebi clarifies on transfer of shares among promoter entities

[The market regulator's view has come on an application filed by one of realty major DLF's promoter entity]

Promoter group entities will not be required to make an open offer if there is no change in control of the company due to transfer of shares among them, according to Sebi.

The market regulator's view has come on an application filed by one of realty major DLF's promoter entity -- Rajdhani Investments & Agencies Pvt Ltd -- seeking informal guidance with respect to applicability of takeover norms for the merger of 10 promoter group companies into it.

While Sebi issued the informal guidance in March this year on DLF's application filed in November 2016, the same was made public only today as the company had sought confidentiality.

With a view to consolidate the holdings and streamline the promoter group firm structure, it was proposed to merge the 10 entities into Rajdhani Investments through a composite scheme of merger with the approval of High Court.

Among others, Rajdhani Investments had submitted that as a result of the proposed merger, there will be no change in the trustees or beneficiaries of the trust and accordingly, there is no change in control or economic beneficial ownership of the transferee.

After taking into consideration the submissions, Sebi said open offer requirement would not be required.

"The conditions for availing exemption would be complied with only on approval of the scheme of merger by the High Court. Therefore transfer and vesting of shares of target company (DLF) in the applicant (Rajdhani Investments) would be exempt from the open offer obligations by virtue of regulation..., subject to the approval of the High Court," Sebi said.

According to the watchdog, open offer would not required under certain provisions of Sebi (Substantial Acquisition of Shares and Takeover) norms. Further, the regulator noted that different facts or conditions might lead to a different result. "Further, this letter does not express a decision of the board on the questions referred," it added.
(ET Reality)