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

WTM/GM/CFD/ 51 /2018–19 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 FDC LIMITED ACQUIRERS MOHAN ANAND CHANDAVARKAR TRUST SANDHYA MOHAN CHANDAVARKAR TRUST

BACKGROUND –

1.1 FDC Limited (“Target Company”) was incorporated under the Companies Act, 1956 on September 23, 1940. The Registered Office of the Target Company is at B–8, MIDC Industrial Estate, Waluj, Aurangabad, Maharashtra–431136. The shares of the Target Company are listed on BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”).

1.2 An Application dated May 4, 2018 (“Application”) seeking exemption from the applicability of Regulation 3 (2) 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 Nandan Mohan Chandavarkar – Trustee of Mohan Anand Chandavarkar Trust (“Acquirer Trust 1”) and Sandhya Mohan Chandavarkar Trust (“Acquirer Trust 2”) (collectively referred to as the “Acquirer Trusts”).

1.3 Regulation 3(2) of the Takeover Regulations states – “Substantial acquisition of shares or voting rights. 3. (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

Order in the matter of FDC Limited 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.”

1.4 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 along with the shareholding post the proposed acquisition in the Target Company, are provided below:

TABLE A – SHAREHOLDING IN THE TARGET COMPANY (SOURCE: APPLICATION) SR. NAME PRESENT SHAREHOLDING PROPOSED SHAREHOLDING NO. NO. OF % NO. OF % SHARES SHAREHOLDING SHARES SHAREHOLDING A. PROMOTER/ PROMOTER GROUP 1. MOHAN ANAND CHANDAVARKAR 18701621 10.72 0 0.00 2. MOHAN ANAND CHANDAVARKAR 0 0.00 18701621 10.72 TRUST (‘ACQUIRER TRUST 1’) 3. SANDHYA MOHAN CHANDAVARKAR 19031473 10.91 0 0.00 4. SANDHYA MOHAN CHANDAVARKAR 0 0.00 19031473 10.91 TRUST (‘ACQUIRER TRUST 2’) 5. 1179897 0.68 1179897 0.68 ADITI C. BHANOT 6. NANDAN MOHAN CHANDAVARKAR 5354532 3.07 5354532 3.07 7. NOMITA RAMDAS CHANDAVARKAR 5587737 3.20 5587737 3.20 8. AMEYA ASHOK CHANDAVARKAR 10540983 6.04 10540983 6.04 9. MEERA RAMDAS CHANDAVARKAR 33624370 19.28 33624370 19.28 10. VIRGO ADVISORS PVT. LIMITED 10575918 6.06 10575918 6.06 11. LEO ADVISORS PVT. LIMITED 15863730 9.10 15863730 9.10 TOTAL 120460261 69.07 120460261 69.07 B. PUBLIC SHAREHOLDING 53942823 30.93 53942823 30.93 C. TOTAL (A + B) 174403084 100.00 174403084 100.00

B. As per the Application, the proposed acquisition of shares by the Acquirer Trusts envisages the following – a. Mohan Anand Chandavarkar, a Promoter who holds 1,87,01,621 (10.72%) equity shares in the Target Company, has settled a Family Trust, viz. Mohan Anand Chandavarkar Trust, by executing a Trust Deed dated February 23, 2018. The Trustees and beneficiaries are the family members of the Transferors.

b. Sandhya Mohan Chandavarkar, also a Promoter who holds 1,90,31,473 (10.91%) equity shares in the Target Company, has settled a Family Trust, viz. Sandhya Mohan Chandavarkar Trust, by executing a Trust Deed dated February 23, 2018. The Trustees and beneficiaries are the family members of the Transferors.

c. The aforementioned Promoters intend to transfer all the equity shares of the Target Company held by them to the aforementioned Acquirer Trusts by way of gift. In other words, the acquisitions involve transfer of 3,77,33,094 (21.63%) equity shares of the Target Company held by the Promoters to the Acquirer Trusts thereby triggering Regulation 3(2) of SAST Regulations.

C. The Settlor, Trustees and Beneficiaries of Acquirer Trusts are as under – ACQUIRER TRUST 1 – MOHAN ANAND CHANDAVARKAR TRUST SETTLOR TRUSTEE BENEFICIARIES RELATIONSHIP Mohan Anand Nandan Mohan Sandhya Mohan Chandavarkar Settlor and Trustee are part of Chandavarkar Chandavarkar Nandan Mohan Chandavarkar the Promoter Group. Alpana Nandan Chandavarkar The beneficiaries and Trustee Anandi Nandan Chandavarkar and in are immediate family members the event of her death, her and their bloodline descendants. descendants.

ACQUIRER TRUST 2 – SANDHYA MOHAN CHANDAVARKAR TRUST SETTLOR TRUSTEES BENEFICIARIES RELATIONSHIP Sandhya Mohan Nandan Mohan Mohan Anand Chandavarkar Settlor and Trustee are part of Chandavarkar Chandavarkar Nandan Mohan Chandavarkar the Promoter Group. Alpana Nandan Chandavarkar The beneficiaries and Trustee Shivani Nandan Chandavarkar and in are immediate family members the event of her death, her and their bloodline descendants. descendants.

D. Grounds for seeking exemption – a. The proposed transfer of equity shares of the Target Company is in favour of the Acquirer Trusts, which have been set up as private family trusts, whose trustees and beneficiaries are the family members of the Transferors and their bloodline descendants. The objective is to provide for a suitable succession planning structure to enable seamless intergenerational transfer of the Trust fund among the beneficiaries who are family members. b. The proposed acquisition would not result in change in control of the target company. c. The holding of the Acquirer Trusts is in substance, only a mirror image of the holdings of the Transferors in the Target Company and consequently, there is no real change of ownership or control of the shares or voting rights in the target company. d. The pre-acquisition and post-acquisition shareholding of promoter group would remain same at 69.07%. e. It is a non-commercial transaction and will not adversely affect or prejudice the interests of the public shareholders of the Target Company in any manner.

1.5 In their reply to certain clarifications sought by SEBI through e–mails dated June 11, 2018 and June 27, 2018, the Acquirer Trusts (vide a letter dated June 29, 2018) confirmed their 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 –

1.6 I have considered the Application submitted by the Acquirer Trusts and other material available on record.

1.7 From the preceding paragraphs, it is noted that –

A. The Application submitted is in respect of the proposed acquisitions of shares and voting rights in the Target Company i.e. FDC Limited.

B. The aforesaid acquisitions are proposed to be made by Mohan Anand Chandavarkar Trust and Sandhya Mohan Chandavarkar Trust i.e. the Proposed Acquirers, in the following manner – i. Transfer of 10.72% shareholding in the Target Company by Mohan Anand Chandavarkar to Acquirer Trust 1 i.e. Mohan Anand Chandavarkar Trust. ii. Transfer of 10.91% shareholding in the Target Company by Sandhya Mohan Chandavarkar to Acquirer Trust 2 i.e. Sandhya Mohan Chandavarkar Trust.

TABLE B – SHAREHOLDING IN THE TARGET COMPANY BEING ACQUIRED BY THE ACQUIRER TRUSTS TARGET COMPANY ACQUIRER/TRANSFEROR PRE – ACQUISITION POST – ACQUISITION NO. OF % OF NO. OF % OF SHARES SHARES SHARES SHARES MOHAN ANAND CHANDAVARKAR (‘TRANSFEROR’) 18701621 10.72 0 0.00 MOHAN ANAND CHANDAVARKAR TRUST (‘ACQUIRER TRUST 1’) 0 0.00 18701621 10.72 SANDHYA MOHAN CHANDAVARKAR (‘TRANSFEROR’) 19031473 10.91 0 0.00 SANDHYA MOHAN CHANDAVARKAR TRUST (‘ACQUIRER TRUST 2’) 0 0.00 19031473 10.91

C. Pursuant to the proposed acquisitions, the Acquirer Trusts would hold shares in the Target Company.

D. The objective of the proposed acquisitions is to provide for a suitable succession planning structure to enable seamless inter–generational transfer of the Trust fund among the beneficiaries who are family members.

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 this transaction).

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.

I. 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 1.5 of pages 4 – 5].

1.8 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 ordered herein below.

ORDER –

2.1 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 Acquirers, viz. Mohan Anand Chandavarkar Trust and Sandhya Mohan Chandavarkar Trust, from complying with the requirements of Regulation 3(2) of the Takeover Regulations with respect to the proposed acquisition/exercise of voting rights in respect of the Target Company, viz. FDC Limited, by way of proposed transactions as mentioned in the Application.

2.2 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. 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 provisions of the SEBI Act and the Regulations framed thereunder will apply on the basis that the ownership or control of shares or voting rights vests not only directly on the Trustees but also indirectly on the beneficiaries of the Proposed Acquirers. v. There shall be no limitation of liability of the Trustees/beneficiaries in relation to the provisions of the SEBI Act and all Regulations framed thereunder. vi. The Proposed Acquirers shall honour their undertakings and shall also ensure compliance with the statements, disclosures and undertakings made in the Application and in the subsequent submissions/correspondence in respect of the SEBI Circular dated December 22, 2017. vii. The Proposed Acquirers shall confirm, on an annual basis, that they are in compliance with the Exemption Order passed by SEBI with reference to the said Order. The said confirmation shall be furnished to the Target Company, which 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.

viii. The Proposed Acquirers shall get the compliance status certified from an independent auditor annually and furnish the same to the Stock Exchanges with a copy endorsed to SEBI for its records. ix. The liabilities and obligations of the transferors under the SEBI Act and Regulations framed thereunder will not change or get diluted due to transfers to the Proposed Acquirers. x. 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.

2.3 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.

2.4 The Application dated May 4, 2018, filed by Nandan Mohan Chandavarkar – Trustee of both Mohan Anand Chandavarkar Trust and Sandhya Mohan Chandavarkar Trust, is accordingly disposed off.

Place: Mumbai G. MAHALINGAM Date: August 21, 2018 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA