SEBI grants exemption to Shakti Pumps' promoters to transfer shares to a trust without open offer

Markets regulator Securities and Exchange Board of India granted exemption to Shakti Pumps' promoters to transfer their shares to three different trusts without evoking Regulations 3 and 4 of the SEBI (Substantial Acquisition of Shares and  Takeovers) Regulations, 2011 where the promoters have to announce an open offer.

SEBI granted the exemption reasoning that the proposed transaction won’t change the control of the management over Shakti Pumps, nor would
promoters hold 56.22 percent of the stake in Shakti Pumps. Three trusts, Shakti Sons Trust, Shakti Brothers Trust, Shakti Future Trust applied to get 37.16 percent of the promoter shareholding. Promoters in the company, Dinesh Patidar, Sunil Patidar and Ankit Patidar who held 20.5 percent, 8.5 percent and 8.16 percent, respectively, will transfer their shares to the three trusts.

According to SEBI’s Takeover regulations, when a acquirer is looking to get 25 percent of stake in a company, they have to announce a public open offer for acquiring the shares. The Trusts applied for exemption for having to announce an open offer.

The promoters had said in their application that the transfer of shares to trust was to ‘carry out internal reorganisation of promoters’ control and shareholding in the target company’. They also pointed out that the proposed transitions won’t affect the public shareholding in the company.
SEBI provided exemption for not making an offer for sale for one year. If the trusts do not complete the translation within the year, the exemption would not be available afterwards.