Sebi exempts PI Industries' promoters from open-offer requirement, paves way for succession

The beneficiaries of the trusts are children and grandchildren of the transferors.

The market regulator has given an exemption to PI Industries' promoters from making an open offer under the Takeover Regulations, since the promoters' transfer of shares to three trusts is being done to streamline succession.

The Securities and Exchange Board of India (Sebi) passed the exemption order on August 14.

The application dated May 15, 2024, was sent to the regulator on the acquisition of shares and voting rights in PI Industries by DoMane Family Trust, RCane Family Trust, Alpha Family Trust and Beta Family trust.

Salil Singhal and Shefali Khushalani wanted to transfer 4.055 percent of shares and voting rights to RCane Family Trust and another 4.055 percent to DoMane Family Trust. Madhu Singhal and Pooja Singhal wanted to transfer 4.055 percent of shares to Alpha Trust and another 4.055 of shares to Beta Trust.

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The beneficiaries of the trusts are children and grandchildren of the transferors.

After the transfer, the trusts would hold 16.21 percent of the shares, while Mayank Singhal, Madhu Singhal and Salil Singhal would hold a little over 29.87 percent of the shares.

Public shareholders will continue to hold 53.9 percent and non-promoter, non-public shareholders will continue to hold 0.01 percent as before the acquisition.

As per the SEBI order, the promoters submitted that the acquirer trusts are 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; that only individual promoters or their immediate relatives or lineal descendants are trustees and beneficiaries of the acquirer trusts; the beneficial interest of the beneficiaries of the Acquirer Trusts has not been and will not in the future, be transferred, assigned or encumbered in any manner including by way of pledge / mortgage; and that, in case of dissolution of these trusts, the assets will be distributed only to the beneficiaries of the trusts or their legal heirs, among other submissions.

Considering these and other submissions made by the promoters, the regulator has decided that there was grounds for an exemption.