Sebi allows Shakti Pumps' promoters to transfer shares to family trust, clears way for succession planning

As the order noted, the pre-acquisition promoter and public shareholding of the company is 51.58 percent and 48.42 percent respectively; and the post-acquisition shareholding pattern would remain the same.

Capital market regulator SEBI has exempted the promoters of Shakti Pumps from the requirement of making an open offer under takeover regulations.

The Securities and Exchange Board of India (Sebi) issued the order on September 10 after considering the promoters' request to allow transfer of shares for succession planning.

Dinesh Patidar had filed an application on behalf of Shakti Sons Trust. The promoter of Shakti Pumps had asked for the exemption for the acquisition of shares of the group's unlisted companies by Shakti Sons Trust.

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It would involve the transfer of shares of four companies -- Vintex Tools Pvt Ltd, Shakti Irrigation India Ltd, Shakti Construction & Developers Pvt Ltd, Roulex Investment & Finance Pvt Ltd -- from Dinesh Patidar and Dinesh Patidar HUF to Shakti Sons Trust.

These transfers would result in the indirect acquisition of Shakti Pumps by the Trust and would trigger an open-offer requirement under takeover regulations.

But as the applicant pointed out, the transactions would only transfer the promoter's shareholding in the group's unlisted companies to the family trust. It would not lead to change in ownership or control of management of Shakti Pumps. Further, the transactions would not lead to total equity shareholding of the target company or change in public shareholding of Shakti Pumps.

The pre- and post-acquisition direct and indirect shareholding and control of the promoters and promoter group will remain the same.

As the order noted, the pre-acquisition promoter and public shareholding of the company is 51.58 percent and 48.42 percent respectively; and the post-acquisition shareholding pattern would remain the same.

The order issued by Sebi's Whole-time Member (WTM) Ashwani Bhatia stated, "I, in exercise of the powers conferred upon me under Section 19 read with Section 11(1) and Section 11(2)(h) of the SEBI Act, 1992 and regulation 11(5) of the Takeover Regulations, 2011, hereby grant exemption to Shakti Sons Trust from requiring to comply with the requirements of regulations 3 and 4 read with regulation 5 of the Takeover Regulations, 2011 with respect to the proposed indirect acquisition in the Target Company, by way of proposed transaction/s as mentioned in the Application."