Exemption Order - Suzlon Energy Limited

WTM/GM/CFD/14/2019–20 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1) AND SECTION 11(2)(h) OF THE SEBI ACT READ WITH REGULATION 11(5) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011. IN THE MATTER OF PROPOSED ACQUISITION OF SHARES AND VOTING RIGHTS IN – TARGET COMPANY SUZLON ENERGY LIMITED ACQUIRERS THE TANTI TRUST

BACKGROUND –

1. Suzlon Energy Limited (“Target Company”) was incorporated under the Companies Act, 1956. The Registered Office of the Target Company is at ‘Suzlon’, 5 Shrimali Society near Shri Krishna Complex, Ahmedabad–380009. The shares of the Target Company are listed on BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”).

2. An Application dated January 14, 2019 (“Application”) read with the revised Application dated May 7, 2019, seeking exemption from the applicability of inter alia Regulations 3, 4 and 5 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations”) in the matter of proposed acquisition of shares and voting rights in the Target Company, was received by SEBI from Vinod R. Tanti on behalf of The Tanti Trust (“Acquirer Trust/Proposed Acquirer”).

3. Regulation 3, 4 and 5 of the Takeover Regulations states – “Substantial acquisition of shares or voting rights. 3. (1) No acquirer shall acquire shares or voting rights in a Target Company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such Target Company, entitle them to exercise twenty–five per cent or more of the voting rights in such Target Company unless the acquirer makes a public announcement of an open offer for acquiring shares of such Target Company in accordance with these Regulations. (2) No acquirer, who together with persons acting in concert with him, has acquired and holds in accordance with these regulations shares or voting rights in a target company entitling them to exercise twenty-five per cent or more of the voting rights in the target company but less than the maximum permissible non-public shareholding, shall acquire within any Order in the matter of Suzlon Energy Limited financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permissible non-public shareholding. Explanation — For purposes of determining the quantum of acquisition of additional voting rights under this sub-regulation,— (i) Gross acquisitions alone shall be taken into account regardless of any intermittent fall in shareholding or voting rights whether owing to disposal of shares held or dilution of voting rights owing to fresh issue of shares by the target company. (ii) In the case of acquisition of shares by way of issue of new shares by the target company or where the target company has made an issue of new shares in any given financial year, the difference between the pre-allotment and the post-allotment percentage voting rights shall be regarded as the quantum of additional acquisition.

Acquisition of control. 4. Irrespective of acquisition or holding of shares or voting rights in a target company, no acquirer shall acquire, directly or indirectly, control over such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.

Indirect acquisition of shares or control 5. (1) For the purposes of Regulation 3 and Regulation 4, acquisition of shares or voting rights in, or control over, any company or other entity, that would enable any person and persons acting in concert with him to exercise or direct the exercise of such percentage of voting rights in, or control over, a Target Company, the acquisition of which would otherwise attract the obligation to make a public announcement of an open offer for acquiring shares under these regulations, shall be considered as an indirect acquisition of shares or voting rights in, or control over the Target Company…”

4. In the aforementioned Application and subsequent submissions, the following was inter alia stated:

A. As on the date of Application, the present shareholding in the Target Company is as under:

TABLE I – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. TULSI R. TANTI 39,05,000 0.07 2. GITA T. TANTI 6,45,12,000 1.21 3. TULSI R. TANTI AS KARTA OF TULSI RANCHHODBHAI HUF 1,80,00,000 0.34 4. TULSI R. TANTI AS KARTA OF RANCHHODBHAI RAMJIBHAI HUF 4,25,70,000 0.80 5. TULSI R. TANTI J/W. VINOD R. TANTI J/W. JITENDRA R. TANTI 4,26,60,000 0.80 6. VINOD R. TANTI 1,13,67,000 0.21 7. JITENDRA R. TANTI 1,24,00,000 0.23 8. SANGITA R. TANTI 7,01,82,000 1.32 9. LINA J. TANTI 7,01,82,000 1.32 10. RAMBHABHEN UKABHAI 1,65,66,000 0.31 11. VINOD R. TANTI AS KARTA OF VINOD RANCHHODBHAI HUF 1,89,00,000 0.36 12. JITENDRA R. TANTI AS KARTA OF JITENDRA RANCHHODBHAI HUF 1,27,23,000 0.24 13. PRANAV T. TANTI 4,25,04,000 0.80 14. NIDHI T. TANTI 30,52,000 0.06 15. RAJAN V. TANTI 1,66,05,000 0.31 16. BRIJ J. TANTI 3,71,17,000 0.70 17. TRISHA J. TANTI 1,51,20,000 0.28 18. TULSI R. TANTI 39,05,000 0.07 19. GIRISH R. TANTI 10,00,19,000 1.88 20. TANTI HOLDINGS PRIVATE LIMITED 15,89,01,093 2.99 21. SAMANVAYA HOLDINGS PRIVATE LIMITED 29,54,99,363 5.55 TOTAL 1,05,27,84,456 19.79 B. PUBLIC SHAREHOLDING 4,25,87,08,825 80.05 C. NON–PROMOTER AND NON–PUBLIC SHAREHOLDING 82,80,840 0.16 D. TOTAL (A + B + C) 5,31,97,74,121 100.00

B. As per the Application, i. Smt. Rambhabhen Ukabhai [Promoter who holds 1,65,66,000 (0.31%) equity shares in the Target Company] has settled a Family Trust, viz. The Tanti Trust, by executing a Trust Deed dated January 9, 2019.

C. The Settlor, Trustees and beneficiaries of the aforementioned Acquirer Trust are as under –

ACQUIRER TRUST – THE TANTI TRUST SETTLOR TRUSTEE BENEFICIARIES RELATIONSHIP Rambhabhen Tulsi R. Tanti Vinod R. Tanti and Girish R. Tanti. Trustee and beneficiaries are the existing Ukabhai Vinod R. Tanti Promoters and have been disclosed as such for more than 3 years. The Trustee and beneficiaries are immediate relatives or lineal descendants of the Promoters.

D. The proposed acquisition involves:

i. As a precursor to the proposed acquisition, the Promoters (entities at serial no. 1–9 and 11– 19 of Table I) shall gift in entirety the equity shares held by them in the Target Company and the Promoter Companies to Rambhabhen Ukabhai. As the shares are encumbered, the gift would be undertaken only with the approval of the lenders. The aforementioned gift of shares would be exempted from the obligation to make an Open Offer by virtue of Regulation 10(1)(a)(ii) of the Takeover Regulations as the transferors and transferee have been named as Promoters in the shareholding pattern filed by the Target Company for not less than three years prior to the proposed acquisition.

ii. Pursuant to the receipt of shares by Rambhabhen Ukabhai (entity at serial no. 10 of Table I), she shall transfer 59,83,84,000 (11.25%) equity shares to The Tanti Trust.

iii. The aforementioned transaction will result in a direct acquisition of shares by The Tanti Trust in the Target Company attracting Regulation 3 of the Takeover Regulations 2011 (“Direct Acquisition”). The shareholding in the Target Company subsequent to the Direct Acquisition will be as under: TABLE II – PROPOSED SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. THE TANTI TRUST 59,83,84,000 11.25 2. TANTI HOLDINGS PRIVATE LIMITED 15,89,01,093 2.99 3. SAMANVAYA HOLDINGS PRIVATE LIMITED 29,54,99,363 5.55 TOTAL 1,05,27,84,456 19.79 B. PUBLIC SHAREHOLDING 4,25,87,08,825 80.05 C. NON–PROMOTER AND NON–PUBLIC SHAREHOLDING 82,80,840 0.16 D. TOTAL (A + B + C) 5,31,97,74,121 100.00

E. Presently, the Promoter Companies, viz. Tanti Holdings Private Limited (“THPL”) and Samanvaya Holdings Private Limited (“SHPL”) are held by the individual Promoters and their immediate relatives and Promoter HUFs. In addition to the Direct Acquisition, the Acquirer Trust will acquire shares in the following Promoter Companies resulting in an indirect acquisition of shares in the Target Company as under:

i. Transfer of 50,98,578 (99.89%) equity shares in THPL from the existing Promoters to The Tanti Trust.

ii. Transfer of 2,51,72,120 (100%) equity shares in SHPL from the existing Promoters to The Tanti Trust.

iii. The aforementioned transactions will result in an indirect acquisition of shares in the Target Company attracting Regulation 5 of the Takeover Regulations 2011 (“Indirect Acquisition”). The shareholding in the Promoter Companies being acquired by The Tanti Trust along with the Indirect Acquisition in the Target Company will be as under:

TABLE III – SHAREHOLDING IN THE PROMOTER COMPANY BEING ACQUIRED BY THE TANTI TRUST (SOURCE: APPLICATION) % OF SHARES OF TRANSFEREE NAME OF PROMOTER SUCH % OF SHARES HELD BY COMPANY PROMOTER RESPECTIVE PROMOTER TRANSFEROR COMPANY COMPANY IN THE TARGET BEING COMPANY TRANSFERRED EXISTING THE TANTI TANTI HOLDINGS 99.89 2.99 PROMOTERS TRUST PRIVATE LIMITED SAMANVAYA 100.00 5.55 EXISTING THE TANTI HOLDINGS PRIVATE PROMOTERS TRUST LIMITED

F. Grounds for seeking exemption – a. The proposed acquisitions of equity shares of the Target Company and the Promoter Companies will result in an aggregate acquisition of approximately 19.79% voting rights of the Target Company by the Acquirer Trust.

b. The Trustees and the ultimate beneficiaries of the Acquirer Trust are existing Promoters of the Target Company for more than three years; hence, there should not be any change in effective control or management of the Target Company.

5. The Acquirer Trust (vide the Application read with the revised Application dated May 7, 2019) has confirmed its compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 – i. The Trust is in substance, only a mirror image of the Promoters’ holdings and consequently, there is no change of ownership or control of the shares or voting rights in the Target Company. ii. Only individual promoters or their immediate relatives or lineal descendants are Trustees and beneficiaries. iii. The beneficial interest of the beneficiaries of the Trust has not been and will not in the future, be transferred, assigned or encumbered in any manner including by way of pledge/mortgage. iv. In case of dissolution of the Trust, the assets will be distributed only to the beneficiaries of the trust or to their legal heirs v. The Trustees will not be entitled to transfer or delegate any of their powers to any person other than one or more of themselves. vi. Any change in the trustees / beneficiaries and any change in ownership or control of shares or voting rights held by Trust shall be disclosed within 2 days to the concerned stock exchanges with a copy endorsed to SEBI for its record. vii. As far as the provisions of the SEBI Act and the regulations framed thereunder are concerned the ownership or control of shares or voting rights will be treated as vesting not only with the Trustees but also indirectly with the beneficiaries. viii. The liabilities and obligations of individual transferors under the SEBI Act and the regulations framed thereunder will not change or get diluted due to transfers to the Trust. ix. The Trust shall confirm, on an annual basis, that it is in compliance with the exemption order passed by SEBI. The said confirmation shall be furnished to the company which it shall disclose prominently as a note to the shareholding pattern filed for the quarter ending March 31 each year, under Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. x. The Trust shall get its compliance status certified from an independent auditor annually and furnish the certificate to the Stock Exchanges for public disclosure with a copy endorsed to SEBI for its records. xi. The proposed acquisition is in accordance with the provisions of the Companies Act, 2013 and other applicable laws.

xii. The transferors are disclosed as promoters in the shareholding pattern filed with the Stock Exchanges for a period of at least 3 years prior to transfer (except for holding on account of inheritance). xiii. There is no layering in terms of trustees/beneficiaries in case of Trusts. xiv. The Trust Deed does not contain any limitation of liability of the trustees/beneficiaries in relation to the provisions of the SEBI Act and all regulations framed thereunder.

CONSIDERATION –

6. I have considered the Application submitted by Vinod Tanti and other material available on record. Without reiterating the facts as stated above, the following is noted:

A. The Application submitted is in respect of the proposed acquisitions of shares and voting rights in the Target Company i.e. Suzlon Energy Limited. The proposed acquisitions as detailed at paragraphs 4D and 4E, which are to be made by The Tanti Trust i.e. the Proposed Acquirer, will attract the provisions of Regulations 3, 4 and 5 of the Takeover Regulations 2011.

B. Pursuant to the proposed acquisitions, the Proposed Acquirer will hold an aggregate of 19.79% of the paid up equity capital in the Target Company.

C. The objective of the proposed acquisitions is to streamline succession and promote welfare of promoter family.

D. There will be no change in control of the Target Company pursuant to the proposed acquisition, as stipulated under the SEBI Circular dated December 22, 2017.

E. The pre–acquisition and post–acquisition shareholding of the Promoters in the Target Company will remain the same (except that of the transferors and the transferees in the Direct Acquisition).

F. There will also be no change in the public shareholding of the Target Company.

G. The Target Company shall continue to be in compliance with the minimum public shareholding requirements under the Securities Contracts Regulation Rules, 1957 (“SCRR”) and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

H. The Proposed Acquirer have also confirmed that they are in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 (as reproduced at paragraph 5).

7. Considering the aforementioned, I am of the view that exemption as sought for in the Application (read with further submissions) may be granted to the Proposed Acquirer, subject to certain conditions as ordered herein below. ORDER –

8. I, in exercise of the powers conferred upon me under Section 19 read with Section 11(1) and Section 11(2)(h) of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) and Regulation 11(5) of the Takeover Regulations, hereby grant exemption to the Proposed Acquirer, viz. The Tanti Trust, from complying with the requirements of Regulations 3, 4 and 5 of the Takeover Regulations with respect to the proposed acquisitions in the Target Company, viz. Suzlon Energy Limited, by way of proposed transactions as mentioned in the Application.

9. The exemption so granted is subject to the following conditions:

i. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws. ii. On completion of the proposed acquisition, the Proposed Acquirer shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations. iii. The statements/averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirer are true and correct. iv. The Proposed Acquirer shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed Acquirer shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017. v. The Proposed Acquirer shall also ensure that the covenants in the Trust Deeds are not contrary to the above conditions and undertaking provided by the transferors. In such case, the Trust Deeds shall be suitably modified and expeditiously reported to SEBI. vi. The Proposed Acquirer shall at all points in time, ensure that Directors appointed in the Promoter Companies, viz. THPL and SHPL, are either the individual Promoters or their immediate relatives or lineal descendants.

10. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations and shall not be construed as exemption from the disclosure requirements under Chapter V of the aforesaid Regulations; compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015; Listing Agreement/SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other applicable Acts, Rules and Regulations. 11. The Application dated January 14, 2019 read with the revised Application dated May 7, 2019, filed by Vinod Tanti on behalf of The Tanti Trust is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: June 14, 2019 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA