No open offer required for inter-se transfer among foreign cos

Foreign companies acquiring stake in a listed Indian firm from a group entity, which are "inter-se transfer" of shares, are exempted from making an open offer to the existing shareholders, according to Sebi.
The Securities and Exchange Board of India (Sebi) has made this observation in response to clarifications sought by Styrolution ABS (India) with regard to proposed transfer of 75 per cent stake by its UK-based promoter entity to a group firm in Singapore.
Generally, open offers are triggered when an entity acquires 25 per cent stake in a listed company. The market regulator has also provisions for exempting entities from making the open offer in certain cases.

Under Sebi norms, acquisition of a company's shares by way of an inter-se transfer amongst the holding company entities or its subsidiaries.
The market regulator has said these exemptions would also apply to inter-se transfer of shares among companies that are registered outside India.
Styrolution ABS (India), which is part of Styrolution Group GmbH Germany, had sought clarity regarding open offer rules if 75 per cent of its stake held by UK-based Styrolution Jersey is acquired by another Singapore group company.

"Styrolution Singapore and Styrolution Jersey are both wholly owned subsidiaries of the same holding company (Styrolution Group) and the acquisition is a result of inter-se transfer of entire equity interest from one of its subsidiary to the other," Sebi said in an interpretative letter released today.

"Hence the said acquisition will fall within the general exemption provided under regulation...," it added.
Styrolution ABS (India) said that post the transaction it will continue to be part of the Styrolution Group.
The proposed transaction will help in optimising regional management and achieving synergies across the operation of the Styrolution group in the Asia-Pacific region, it added.