Corrigendum to the Order dated April 19, 2021 passed under Regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of Kaveri Seed Company Limited
- Order No.WTM/SM/CFD/5/2022-23
Ratio decidendi
The rule this decision rests on
Where a transfer of shares already covered by an exemption order is restructured into a two-step sequence, and the ultimate quantum of shares transferred and the pre- and post-acquisition shareholding of the promoter and promoter group remain unchanged, the regulator may modify the earlier order to reflect the revised route. A modification of that kind is permissible where it does not affect or prejudice the interests of public shareholders and remains in compliance with the guidelines in the schedule to the SEBI Circular dated December 22, 2017. Where those conditions are met, the change is effected by a corrigendum, and the original order is to be read with it.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
WTM/SM/CFD/ 5 /2022-23 SECURITIES AND EXCHANGE BOARD OF INDIA CORRIGENDUM ORDER CORRIGENDUM TO THE ORDER DATED APRIL 19, 2021 BEARING REFERENCE NUMBER WTM/SKM/CFD/12/2021-22 IN THE MATTER OF KAVERI SEED COMPANY LIMITED. In respect of: TARGET COMPANY KAVERI SEED COMPANY LIMITED ACQUIRERS 1. MADHUSHREE PRIVATE TRUST 2. PAWAN PRIVATE TRUST
1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) vide Order dated April 19, 2021 has inter-alia granted exemption to Madhushree Private Trust (hereinafter referred to as “Acquirer 1”) and Pawan Private Trust, from complying with the requirements of Regulation 3(1) and 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as “Takeover Regulations, 2011”) with respect to the proposed direct acquisitions in the Target Company, viz. Kaveri Seed Company Ltd. (hereinafter referred to as “Target Company”). 2. Acquirer 1 while seeking the aforesaid exemption under Takeover Regulations, 2011, had inter alia submitted the following proposed acquisition: Venkata Bhaskar Rao Gundavaram (HUF) (for short “Venkata HUF”), a promoter of the Target Company, who currently holds 99,85,649 equity shares in the Target Company, intends to gift its entire shareholding in the Target Company to Acquirer 1. 3. Pursuant to the passing of SEBI Order dated April 19, 2021, legal representative of the Target Company vide letter dated February 23, 2022 and Acquirer Trust 1 vide application dated March 27, 2022 and through subsequent correspondences vide emails dated August 30, 2022, September 29, 2022 and October 22, 2022 (hereinafter collectively referred to as “Application”) Corrigendum Order in the matter of Kaveri Seed Company Limited has proposed to transfer the above said 99,85,649 equity shares of Target Company held by Venkata HUF to Acquirer 1 in following two steps: a) 1st step: Venkata HUF shall transfer the said 99,85,649 equity shares of Target Company to its Karta i.e. G. V. Bhaskar Rao as gift; b) 2nd step: G. V. Bhaskar Rao shall transfer the said 99,85,649 equity shares of Target Company to Acquirer 1 as gift.
4. It has been submitted and clarified in the Application that the ultimate quantity of transaction of transferring 99,85,649 equity shares of Target Company from Venkata HUF to Acquirer 1 remains same and it only entails a two-step transaction. There would be no change in pre-acquisition & post-acquisition shareholding of promoter & members of the promoter group in the Target Company. A graphical representation of the proposed transactions as per SEBI Order dated April 19, 2021 and proposed transactions as per Acquirer 1’s Application is given below: Diagram 1 Proposed transaction as per SEBI Order dated April 19, 2021 99,85,649 Shares Madhushree Private Venkata HUF Gift Trust
One Step Transaction Proposed transaction as per Application
Step 1 Step 2 99,85,649 99,85,649 G. V. Bhaskar Rao shares shares Madhushree Venkata HUF (Karta of Venkata Gift Private Trust HUF) Gift
Two Step Transaction
5. It is further noted from the submissions provided in the present matter that the proposed change in the transaction shall not affect or prejudice the interest of the public shareholders in any manner and shall continue to be in compliance with guidelines outlined in the schedule to the SEBI Circular dated December 22, 2017. 6. In view of the above, paragraph 3(b) of SEBI Order dated April 19, 2021 is modified as under as far as the transfer of shares from Venkata HUF to Acquirer Trust 1 are concerned: “Venkata Bhaskar Rao Gundavaram (HUF) (for short “Venkata HUF”), a promoter of the Target Company, who currently holds 99,85,649 equity shares in the Target Company, intends to gift its entire shareholding in the Target Company to G.V. Bhaskar Rao (for short “GVBR”), who is Karta of Venkata HUF. GVBR further intends to gift the aforesaid shareholding (99,85,649 equity shares) in the Target Company to Acquirer 1.” 7. The Order dated April 19, 2021 bearing number WTM/SKM/CFD/12/2021-22 shall always be read with this Corrigendum. Sd/- Place: Mumbai S.K. MOHANTY Date: November 30, 2022 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free