Exemption order under regulation 11 of SEBI (SAST) Regulations, 2011 in the matter of APIS India Limited

WTM/GM/CFD/38/2019–20 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 APIS INDIA LIMITED ACQUIRERS ANAND DRISHTI TRUST

BACKGROUND –

1. APIS India Limited (“Target Company”) was incorporated under the Companies Act, 1956 on March 22, 1983. The Registered Office of the Target Company is at 18/32, East Patel Nagar, New Delhi–110008. The shares of the Target Company are listed on BSE Limited (“BSE”).

2. An Application dated June 26, 2019 read with e–mail dated July 29, 2019 (“Application”) 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 Amit Anand on behalf of Anand Drishti Trust (“Acquirer Trust/Proposed Acquirer”).

3. Regulation 3, 4 and 5 of the Takeover Regulations state – “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 financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent Order in the matter of APIS India Limited 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. PREM ANAND 11,31,242 20.53 2. VIMAL ANAND 9,62,553 17.47 3. AMIT ANAND 9,64,364 17.50 4. MANISHA ANAND 4,28,000 7.77 5. SAKSHI ANAND 4,28,000 7.77 6. APIS NATURALS PRODUCT PRIVATE LIMITED 59,220 1.07 7. MODERN HERBALS PRIVATE LIMITED 1,43,820 2.61 TOTAL 41,17,199 74.72 B. PUBLIC SHAREHOLDING 13,92,877 25.28 C. TOTAL (A + B) 55,10,076 100.00

B. As per the Application, i. Mohit Ahuja has settled a Family Trust, viz. Anand Drishti Trust, by executing a Trust Deed dated May 22, 2019.

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

ACQUIRER TRUST – ANAND DRISHTI TRUST SETTLOR TRUSTEE BENEFICIARIES RELATIONSHIP Mohit Ahuja 1. Prem Anand 1. Prem Anand The Trustee and beneficiaries are 2. Vimal Anand 2. Vimal Anand (son of Prem Anand) either Promoters or their 3. Amit Anand. 3. Manisha Anand (Wife of Vimal Anand) immediate relatives. 4. Amit Anand (son of Prem Anand) 5. Sakshi Anand (Wife of Amit Anand).

D. The proposed acquisition involves:

i. Transfer of 39,14,159 (71.04%) equity shares from Prem Anand, Vimal Anand, Amit Anand, Manisha Anand and Sakshi Anand to Anand Drishti Trust.

ii. The aforementioned transaction will result in a direct acquisition of shares by the Acquirer 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. ANAND DRISHTI TRUST 39,14,159 71.04 2. APIS NATURALS PRODUCT PRIVATE LIMITED 59,220 1.07 3. MODERN HERBALS PRIVATE LIMITED 1,43,820 2.61 TOTAL 41,17,199 74.72 B. PUBLIC SHAREHOLDING 13,92,877 25.28 C. TOTAL (A + B) 55,10,076 100.00

E. In addition to the Direct Acquisition, the Acquirer Trust will acquire shares in the Promoter Companies (which are owned and controlled by the Promoter family) resulting in an indirect acquisition of shares/control in the Target Company as under:

i. Transfer of 16,040 (100%) equity shares of APIS Naturals Product Private Limited (“ANPPL”) to Anand Drishti Trust.

ii. Transfer of 1,63,200 (100%) equity shares of Modern Herbals Private Limited (“MHPL”) to Anand Drishti Trust.

iii. The aforementioned transactions (at paragraph 4E. i. and ii.) will also result in an indirect acquisition of shares/control in the Target Company i.e. acquisition by Anand Drishti Trust of 59,220 (1.07%) equity shares held by ANPPL and 1,43,820 (2.61%) equity shares held by MHPL, attracting Regulation 5 of the Takeover Regulations 2011 (“Indirect Acquisition”).

iv. The shareholding in the Promoter Companies being acquired by the Acquirer Trust along with the Indirect Acquisition in the Target Company will be as under:

TABLE III – SHAREHOLDING IN ANPPL (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. PREM ANAND 8,020 50 2. VIMAL ANAND 4,010 25 3. AMIT ANAND 4,010 25 TOTAL 16,040 100.00

TABLE IV – SHAREHOLDING IN MHPL (SOURCE: APPLICATION) NAME NO. OF SHARES % SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. PREM ANAND 1,10,600 67.77 2. VIMAL ANAND 52,300 32.05 3. AMIT ANAND 300 0.18 TOTAL 1,63,200 100.00

TABLE V – SHAREHOLDING IN THE PROMOTER COMPANY BEING ACQUIRED BY THE ACQUIRER TRUST (SOURCE: APPLICATION) TRANSFEREE NAME OF % OF SHARES OF % OF SHARES HELD BY RESPECTIVE PROMOTER SUCH PROMOTER TRANSFEROR PROMOTER COMPANY IN THE COMPANY COMPANY BEING TARGET COMPANY TRANSFERRED PREM ANAND APIS NATURALS 100.00 1.07 ANAND DRISHTI VIMAL ANAND TRUST PRODUCT PRIVATE AMIT ANAND LIMITED

PREM ANAND ANAND DRISHTI MODERN HERBALS 100.00 2.61 VIMAL ANAND TRUST PRIVATE LIMITED AMIT ANAND

F. Grounds for seeking exemption – a. The proposed acquisition (by way of gift) will take place pursuant to a private family arrangement, which is intended at consolidation of shareholding of existing Individual Promoters in APIS in a family trust to facilitate succession planning and welfare of the Anand Family. It is a non–commercial transaction, which will not prejudice the interests of the public shareholders of the Target Company in any manner.

G. The Acquirer Trust (vide an e–mail dated July 29, 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.

The Acquirer Trust has also submitted the Deed of Amendment executed on October 01, 2019, incorporating changes to the Trust Deed to ensure its compliance with the requirements specified in SEBI Circular dated December 22, 2017.

CONSIDERATION –

5. I have considered the Application submitted by Amit Anand 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. APIS India Limited. The proposed acquisitions as detailed at paragraphs 4D and 4E, which are to be made by Anand Drishti 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 74.72% of the paid up equity capital in the Target Company on account of the direct and indirect acquisitions in such Company.

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

D. The shareholding in ANPPL and MHPL (Promoters of the Target Company) are substantially held by Prem Anand, Vimal Anand and Amit Anand (all Promoters of the Target Company) (see Tables III and IV).

E. There will be no change in control of the Target Company pursuant to the proposed acquisition.

F. 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).

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

H. 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.

6. Upon perusal of the Trust Deed, as amended on October 01, 2019, it is observed that the terms therein are in compliance with the Guidelines outlined in the Schedule to the SEBI Circular dated December 22, 2017. Accordingly, the Applicant Trust is eligible for exemption as sought and the same is being granted subject to certain conditions imposed in the interest of investors, as ordered herein below.

ORDER –

7. 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. Anand Drishti 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. APIS India Limited, by way of proposed transactions as mentioned in the Application.

8. 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. ANPPL and MHPL, are either the individual Promoters or their immediate relatives or lineal descendants.

9. 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.

10. The Application dated June 26, 2019 read with e–mail dated July 29, 2019, filed by Amit Anand on behalf of Anand Drishti Trust, is accordingly disposed of.

Place: Mumbai G. MAHALINGAM Date: October 4, 2019 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA