Sebi exempts family trust linked to Capri Global from open offer obligation

Markets regulator Sebi on Thursday exempted J J R Family Trust from making open offer following its proposed acquisition of shares in Capri Global Capital Ltd.

The order comes after Sebi received application from the trustee of J J R Family Trust seeking exemption from the applicability of SAST (Substantial Acquisition of Shares and Takeovers) Regulations in the matter of proposed acquisition of shares in Capri Global Capital.

The proposed acquisition involves direct and indirect acquisition of shares of Capri Global Capital (target company) by the Trust from promoter and members of promoter group of the company, Sebi said in an order.

Pursuant to acquisition of shares and voting rights by the acquirer, the Trust along with other promoters and promoter group will directly and indirectly have control over the target company.

Under the direct acquisition, the Sharma family intends to dissolve and partition the assets of Ramesh Chandra Sharma HUF which is holding 1.22 per cent shares of Capri Global Capital, such that the shareholding will be distributed to Ramesh Chandra Sharma being the Karta of the Ramesh Chandra Sharma hindu undivided family (HUF).

Thus, the shareholding of Ramesh Chandra Sharma would increase from 24.97 per cent to 26.19 per cent. The Trust proposes to acquire entire 26.19 per cent shares of Capri Global Capital by way of gift directly from him.

In the indirect acquisition, the Trust proposes to acquire 99.97 per cent stake each in Capri Global Holdings and Capri Global Advisory Services from Ramesh Chandra Sharma, by way of gift.

Capri Global Holdings and Capri Global Advisory Services hold 38.69 per cent and 9.99 per cent stake in Capri Global Capital respectively.

The proposed transactions will attract the obligation to make open offers under the takeover regulations and accordingly exemption was sought from the regulator.

The exemption has been sought on the ground that the proposed acquisition is intended to streamline succession and welfare of the members of Sharma family, being members of the promoter group of the target company.

In the order, Sebi said there will be no change in control of the firms pursuant to the proposed acquisitions.

The pre-acquisition and post-acquisition shareholding of the promoters and promoter group in the company will remain the same. Besides, there will be no change in the public shareholding of the company.

Accordingly, the regulator has granted "exemption to the proposed acquirer, viz. J J R Family Trust from complying with the requirements of the Takeover Regulations 2011 with respect to the proposed direct and indirect acquisitions in the target company-- Capri Global Capital Limited--by way of proposed transactions".

The exemption is subject to certain conditions, including compliance with the provisions of the Companies Act and other norms.

In a separate order, Sebi has granted exemption to certain entities from open offer requirements in connection with acquisition of equity shares of Som Distilleries and Breweries in the proposed rights issue offered by the company.

The entities that have been exempted are Jagdish Kumar Arora, Ajay Kumar Arora, Deepak Arora, Som Distilleries Pvt Ltd and Aalok Deep Finance. They are part of the promoter group.

Granting exemption, Sebi said that pursuant to the rights issue there will be no change in the management control of the company.

Som Distilleries and Breweries has proposed to issue 49,99,058 equity shares through rights issue to its shareholders and the four entities will subscribe to their entitlement of 11,77,557 equity shares.

Subscription by proposed acquirers up to their entitlement will not trigger obligation to make an open offer under Takeover Regulations, 2011. They will subscribe to additional shares if the existing shareholders do not subscribe to their entitlement.

The exemption was sought as Som Distilleries and Breweries is facing financial problems and due to COVID 19, its operations have been severely impacted. The proposed fund raising by way of rights issue is aimed at infusing more equity and to enhance the net worth of the firm.

Through an another order, the regulator has granted relaxation to Rubber Products Ltd from the certain provisions of the delisting rules.

While granting exemption, Sebi noted that the company is not having any public shareholder at present.

The relaxation has been granted from the applicability of rules dealing with exit opportunity, requirement of achieving minimum public shareholding, provisions of escrow account and right of shareholders to participate in the reverse book building process of the delisting norms.

The relaxations are subject to certain conditions, which include that the company will have to complete the delisting exercise within six months.