Exemption order under Regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of Puravankara 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 PURAVANKARA LIMITED ACQUIRER RAVI PURAVANKARA TRUST

BACKGROUND – 1. Puravankara Limited (“Target Company”) was incorporated under the Companies Act, 1956 on June 03, 1986. The Registered Office of the Target Company is at 130/1, Ulsoor Road, Bangalore – 560042. 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 08, 2018 (“Application”) read with letters dated January 10,2019, May 31, 2019, July 04, 2019 and December 19, 2019, seeking exemption from the applicability of Regulations 3 and 4 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 Ravi Puravankara on behalf of Ravi Puravankara Trust (“Applicants/Acquirer Trust”). 3. Regulation 3 and 4 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 Puravankara 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.” 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 % SHAREHOLDI NG A. PROMOTER/ PROMOTER GROUP 1. RAVI PURAVANKARA 17,78,52,904 75.00 2. ASHISH PURAVANKARA 4,800 0.00 3. VISHALAKSHI PURAVANKARA 1,920 0.00 4. AARATI PURAVANKARA 1,440 0.00 5. AMANDA PURAVANKARA 1,200 0.00 TOTAL 17,78,62,264 75.00 B. PUBLIC SHAREHOLDING 5,92,87,422 25.00 C. TOTAL (A + B) 23,71,49,686 100.00

B. As per the Application, i. Ravi Puravankara [Promoter who holds 17,78,52,904 (75.00%) equity shares in the Target Company] has settled a Family Trust -Ravi Puravankara Trust, by executing a Trust Deed dated May 29,2019 and supplementary amendment deed dated July 04,2019.

ii. The Settlor, Trustees and beneficiaries of the aforementioned Acquirer Trust are as under – TABLE II ACQUIRER TRUST – THE RAVI PURAVANKARA TRUST SETTLOR TRUSTEE BENEFICIARIES RELATIONSHIP  Ravi  Ravi  Ravi Puravankara The Trustees and beneficiaries are Puravankara Puravankara  Ashish Puravankara either Promoters or their immediate  Ashish family relatives/lineal descendants. Puravankara  Aarati Puravankara  Amanda family Puravankara  Amanda Puravankara family  Tanya Puravankara family C. The proposed acquisition involves transfer of 17,78,52,904 equity shares representing 75% of the issued, subscribed and paid-up equity share capital of the Target Company to the Trust. D. The aforementioned transaction will result in a direct acquisition of shares by Ravi Puravankara Trust in the Target Company attracting Regulation 3 and 4 of the Takeover Regulations 2011(“Direct Acquisition”). The shareholding in the Target Company subsequent to the Acquisition will be as under: TABLE III SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDI NG A. PROMOTER/ PROMOTER GROUP 1. RAVI PURAVANKARA TRUST 17,78,52,904 75.00 2. ASHISH PURAVANKARA 4,800 0.00 3. VISHALAKSHI PURAVANKARA 1,920 0.00 4. AARATI PURAVANKARA 1,440 0.00 5. AMANDA PURAVANKARA 1,200 0.00 TOTAL 17,78,62,264 75.00 B. PUBLIC SHAREHOLDING 5,92,87,422 25.00 C. TOTAL (A + B) 23,71,49,686 100.00

E. Grounds for seeking exemption – a. The Trust is a private trust set up for benefit of the Settlor himself and his children or trusts set up for the benefit of such children and their respective family members. Further, the Settlor and the Trustees are part of the Promoter Group of the Company and/ or their immediate family members. b. There shall be no change in the management and control of the Company pursuant to the proposed transfer of shares of the Company as aforesaid (i.e. the person who is in the control and management of the Company and who is one of the Promoters of the Company for the purposes of the SAST Regulations shall continue to retain effective control and management in the Company in his capacity as one of the Trustees and beneficiaries of the Trust).

c. The proposed transfer is not for the purpose of acquiring control and management over the Company. The effective control of the Company, as well as the financial benefit vis-à-vis the shares of the Company remains vested with the individual members of the Promoter Group. Post the proposed transfer, the shareholding of the Promoter Group would remain unchanged at 75%, though there may be change in the constitution of the Promoter Group category. d. Given the objectives for the settlement of the Trust, it would in fact incentivise the persons in control and management of the Company to continue to remain vested with control of the Company for a longer period of time, and the public shareholders of the Company are likely to benefit pursuant to the acquisition of shares by the Trust. It is submitted that a trust by its very nature is difficult to unwind, and it is submitted that the Trust provides for unified structure for the assets of the family, thereby making transfer of shares of the Company even more difficult than it currently is, and it is submitted that this will also prevent any erosion of Promoter holdings in the Company.

5. The Acquirer Trust (vide the Application read with the letters dated January 10,2019, May 31, 2019, July 04, 2019 and December 19,2019) 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 Ravi Puravankara 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. Puravankara Limited. The proposed acquisition as detailed at paragraph 4D, which is to be made by Ravi Puravankara Trust will attract the provisions of Regulations 3 and 4 of the Takeover Regulations 2011. B. Pursuant to the proposed acquisitions, the Proposed Acquirer will hold 75% of the paid up equity capital in the Target Company. The shareholding of the promoters in the Target Company would remain the same post completion of the proposed acquisition. C. 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. D. The total pre–acquisition and post–acquisition shareholding of the Promoters in the Target Company will remain the same.

E. There will also be no change in the public shareholding of the Target Company. F. 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. G. The Proposed Acquirer has also confirmed that it is 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. Ravi Puravankara Trust, from complying with the requirements of Regulations 3 and 4 of the Takeover Regulations with respect to the proposed acquisitions in the Target Company, viz. Puravankara Limited, by way of proposed transaction 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 transferor. In such case, the Trust Deeds shall be suitably modified and expeditiously reported to SEBI.

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 08, 2018 (“Application”) read with letters dated January 10,2019, May 31, 2019, July 04, 2019 and December 19,2019, filed by Ravi Puravankara on behalf of Ravi Puravankara Trust is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: February 12, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA