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Shares gifted to immediate relatives, including spouse and in-laws, would not trigger open offer obligations on the promoters of a company, market regulator Sebi has said.
Securities and Exchange Board of India (Sebi) has made its position clear in this regard through an interpretive letter sought by certain promoter entities of media group DB Corp.
The letter was issued in August 2012 but Sebi made it public today after the expiry of 90-day secrecy clause sought by the company.
Besides blood relations, immediate relatives as defined by the market regulator would also include spouse and brother-in-law, sister-in-law among others, Sebi said.
Three brothers Sudhir Agarwal, Girish Agarwal and Pawan Agarwal who along with their father and respective spouses own shares of seven promoter group companies of DB Corp.
According to Agarwal brothers, their father wants to transfer his shares in six of the promoters group companies to them.
Besides, the brothers want to transfer among themselves shares of two promoter group firms, while two other transactions involve transfer of shares from sister-in-law to brother-in-law.
"As voluntary and consensual family arrangement, the Agarwal family members wish to gift/transfer shares of the six companies amongst themselves so as to streamline the family shareholding," the brothers informed Sebi in a letter.
According to norms, any direct or indirect acquisition of shares amounting to 25% or more stake in a listed company, or a control over the target company, triggers a mandatory open offer by the acquirer for public shareholders.
However, Sebi said the proposed transfers in the case of D B Corp appear to be between entities who are 'immediate relative' as defined under the takeover norms.
Therefore, Sebi said, exemption from open offer obligations would extend to the proposed transfer of shares.
Sebi also clarified that its present position is based on the representation made before it and "different facts or conditions might require a different result".
