Sebi grants exemption from Open Offer to Janky Rupen Patel in indirect acquisition in Patel Engineering Ltd

SEBI Grants Exemption from Open Offer to Janky Rupen Patel in Indirect Acquisition in Patel Engineering Ltd

Market regulator, the Securities and Exchange Board of India (Sebi), on Friday granted an exemption to Janky Rupen Patel, a promoter of Patel Engineering Limited (PEL), from making an open offer under the SEBI Takeover Regulations for a proposed indirect acquisition of shares and voting rights in the company.

Following the death of promoter Rupen Pravin Patel, his partnership interests in Praham India LLP (PI LLP) and shareholding in Raahitya Construction Pvt. Ltd. (RCPL)—both promoter entities of Patel Engineering Limited—were inherited by his children.

Rupen Pravin Patel, one of the promoters of Patel Engineering, passed away on July 5, 2024. Upon his demise, his rights, title, and interest in Praham India LLP were equally transmitted to his children, Alina Rupen Patel and Ryan Rupen Patel, on September 13, 2024. Additionally, Raahitya Constructions Private Limited was transmitted to Janky Rupen Patel, spouse of Rupen Pravin Patel and a promoter of Patel Engineering, on the same date.

Thereafter, the children proposed to gift 99.98% of their stake in Praham India LLP to their mother, Janky Rupen Patel. This would give her indirect control over 32.28% of the company’s equity. Raahitya Construction Private Limited holds 27.52 percent, and Praham India LLP holds 4.76 percent in Patel Engineering.

In its application to Sebi, the company stated that no equity shares of the target company are proposed to be directly acquired by the acquirer. The proposed acquisition involves indirectly acquiring the equity shares of the target company. It also stated that there will be no change of control or change in the shareholding pattern of the target company pursuant to the proposed acquisition, as it is between persons forming part of the promoter and promoter group of the target company.

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The issue was placed before the SEBI Takeover Panel. After deliberations, the panel observed that the proposed transaction in the application was between immediate relatives—i.e., mother and children—who fall within the definition of "immediate relative" under Regulation 2(1)(l) of the Sebi (SAST) Regulations, 2011. The panel further observed that there is no ultimate change in control in the target company, as the applicant has been shown as a promoter of the target company in the shareholding patterns filed with stock exchanges for the last three years. Hence, the transfer of shares would not prejudice the interests of public shareholders. The panel therefore recommended granting the exemption.

Based on the recommendations of the Sebi Takeover Panel, the regulator granted the exemption under the Takeover Regulations, 2011, with certain conditions. The exemption is valid for one year. This development simplifies the succession of control within the promoter group while maintaining transparency and shareholder protection.

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