Exemption order under Regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of Minda Corporation Limited

UNDER SECTION 11(1) AND SECTION 11(2)(h) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 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 MINDA CORPORATION LIMITED ACQUIRERS ASHOK MINDA FAMILY INVESTMENT TRUST SARIKA MINDA FAMILY INVESTMENT TRUST

Background –

1. Minda Corporation Ltd. (“Target Company”) was incorporated under the Companies Act, 1956 on March 11, 1985. The Registered Office of the Target Company is at A-15, Ashok Vihar, Phase-I, Delhi-110052. The shares of the Target Company are listed on BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”) (Listing date – October 16, 2014).

Order in the matter of Minda Corporation Limited

2. An Application dated November 7, 2019 (“Application”), seeking exemption from the applicability of, inter alia, Regulations 3(1), 4 & 5(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Regulations 2011”) in the matter of proposed acquisition of shares and voting rights in the Target Company, was received by SEBI from Ashok Minda Family Investment Trust (“Acquirer Trust 1”) and Sarika Minda Family Investment Trust (“Acquirer Trust 2”) (collectively referred to as “Acquirer Trusts / Proposed Acquirers”).

3. Regulation 3(1), 4 and 5(1) of the Takeover Regulations 2011 state as under – “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. 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. The shareholding of the Target Company as on September 30, 2019 is as under:

Table I – Shareholding in the Target Company (Source: Application) Name No. of shares % Shareholding A. Promoter/ Promoter Group 1. Ashok Minda 8,14,66,380 35.85 2. Sarika Minda 3,33,94,900 14.70 3. Minda Capital Private Limited 3,85,81,298 16.98 4. Whiteline Barter Limited 13,06,100 0.57 B. Public Shareholding 6,75,83,567 29.74 C. Employee Trust 48,90,040 2.15 Total 22,72,22,285 100

B. As per the Application dated November 7, 2019, i. Acquirer Trust 1 will acquire 8,14,66,380 (35.85%) equity shares of Target Company from Ashok Minda. Further, Ashok Minda will also transfer 1,42,17,553 (76.34%) equity shares of Minda Capital Pvt Ltd. (“MCPL”) to the Acquirer Trust 1. MCPL holds 3,85,81,298(16.98%) equity shares in the Target Company.

ii. Acquirer Trust 2 will acquire 3,33,94,900 (14.70%) equity shares of Target Company from Sarika Minda. Further, Sarika Minda will transfer 23,24,936 (12.48%) equity shares of MCPL to the Acquirer Trust 2.

iii. MCPL holds 100% shareholding in Whiteline Barter Ltd. (WBL). WBL holds 13,06,100(0.57%) shareholding in the Target Company.

iv. The Acquirer Trusts are irrevocable discretionary private trusts.

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

Table II – Details of Acquirer Trust - 1 Settlor Trustees Beneficiaries Relationship

Pramode Ashok Minda Aakash Minda (Son The Beneficiaries and Parasramka Sarika Minda (Wife of Ashok Minda) Trustees are of Ashok Minda) Sarika Minda immediate family Divya Gupta members. (Daughter of Ashok Minda) Megha Batra (Daughter of Ashok Minda) Lineal Descendants of Aakash Minda

Table III – Details of Acquirer Trust -2 Settlor Trustees Beneficiaries Relationship

Pramode Ashok Minda Ashok Minda The Beneficiaries and Parasramka Sarika Minda Aakash Minda Trustees are Divya Gupta immediate family Megha Batra members. Lineal Descendants of Aakash Minda

D. The proposed acquisition involves:

i. Acquisition by Acquirer Trust 1 of 8,14,66,380 (35.85%) equity shares of the Target Company and 1,42,17,553 (76.34%) equity shares of MCPL held by Ashok Minda, without any consideration;

ii. Acquisition by Acquirer Trust 2 of 3,33,94,900 (14.70%) equity shares of the Target Company and 23,24,936 (12.48%) equity shares of MCPL held by Sarika Minda, without any consideration.

iii. The aforesaid transactions would result in direct acquisition by Acquirer Trusts of 11,48,61,280 equity shares held by Ashok Minda and Sarika Minda representing 50.55% and indirect acquisition of 3,98,87,398 equity shares, held by them through MCPL and Whiteline Barter Ltd., representing 17.55% of the total shareholding of the Target Company from the promoters and promoter group.

Table IV – Proposed Shareholding in the Target Company (Source: Application) Name No. of shares % Shareholding A. Promoter/ Promoter Group 1. Ashok Minda Family Investment Trust 8,14,66,380 35.85 2. Sarika Minda Family Investment Trust 3,33,94,900 14.70 3. MCPL 3,85,81,298 16.98 4. Whiteline Barter Ltd 13,06,100 0.57 B. Public Shareholding 6,75,83,567 29.74 C. Employee Trust 48,90,040 2.15 Total 22,72,22,285 100.00

E. Grounds for seeking exemption – i. Proposed acquisition shall not result in change in control or management of the Target Company since the existing promoters shall only be the Trustee and Beneficiaries of the Acquirer Trusts.

ii. The acquisition shall take place owing to Ashok Minda’s and Sarika Minda’s natural love and affection towards their close family. This shall also aid in maintaining peace, harmony and unity among the family members of Ashok Minda and averting any potential dispute among such members.

iii. The proposed acquisition of shares is a non-commercial transaction without any monetary consideration which will not prejudice the interests of the public shareholders of the Target Company.

iv. The proposed transfer of shares of the Target Company is not to any third party but to private family trusts whose Trustees and Beneficiaries are family members of individual promoters and their bloodline descendants.

v. There will be no change in the overall promoter shareholding of the Target Company and Minda Family will continue to be in control of the Target Company.

vi. The acquisition takes place between the sellers, who are the promoters of the Target Company, and the Acquirer Trust whose Trustees and Beneficiaries are part of existing promoter group of the Target Company.

vii. The pre-acquisition and post-acquisition shareholding of promoter group would remain same at 68.1%.

viii. Automatic exemptions available under Regulation 10 do not apply to the proposed transaction.

5. The Acquirer Trusts (vide the Application read with emails dated December 5, 2019 and December 24, 2019) have confirmed their compliance with the following Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017 – i. The Trusts are, 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 Trusts have 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 Trusts, 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 Trusts 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 Trusts.

ix. The Trusts shall confirm, on an annual basis, that they are 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 Trusts shall get their 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 the 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 Deeds do 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 the Acquirer Trust and other materials 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. Minda Corporation Ltd. The proposed Acquisition as detailed at paragraph 4D above, which are to be made by the Proposed Acquirers, will attract the provisions of Regulations 3, 4 and 5 of the Takeover Regulations 2011.

B. Pursuant to the proposed acquisitions, the Proposed Acquirers will hold an aggregate of 68.1% of the paid up equity capital in the Target Company.

C. The objective of the proposed acquisitions is to streamline the succession of Minda Family and their respective descendants.

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 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 Acquirers 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 Acquirers, subject to certain conditions as laid down 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 2011, hereby grant exemption to the Proposed Acquirers, viz. Ashok Minda Family Investment Trust and Sarika Minda Family Investment Trust, from complying with the requirements of Regulations 3, 4 and 5 of the Takeover Regulations 2011 with respect to the proposed acquisitions in the Target Company, viz. Minda Corporation Ltd., 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 Acquirers shall file a report with SEBI within a period of 21 days from the date of such acquisition, as provided in the Takeover Regulations 2011.

iii. The statements / averments made or facts and figures mentioned in the Application and other submissions by the Proposed Acquirers are true and correct.

iv. The Proposed Acquirers shall ensure compliance with the statements, disclosures and undertakings made in the Application. The Proposed

Acquirers shall also ensure compliance with the provisions of the SEBI Circular dated December 22, 2017.

v. The Proposed Acquirers 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. References to ‘voting trust’ and ‘arbitration’ in the Trust Deeds shall be removed.

10. The exemption granted above is limited to the requirements of making open offer under the Takeover Regulations 2011 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 November 7, 2019 and related correspondences, filed by the Proposed Acquirers is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: March 31, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA