Order in the matter of Exemption application filed under regulation 11 of Takeover Regulations, 2011 for acquisition of shares of Wipro Limited

WTM/PS/148/CFD/DCR-II/FEB/2016 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER In the matter of acquisition of shares and voting rights of Wipro Limited – Application filed under regulation 11 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

1. Wipro Limited (hereinafter referred to as 'the Target Company') is a company incorporated under the Companies Act, 1956, having its registered office at Doddakannelli, Sarjapur Road, Bangalore – 560 035. The equity shares of the Target Company are listed on the Bombay Stock Exchange Limited (hereinafter referred to as 'BSE') and the National Stock Exchange of India Limited (hereinafter referred to as 'NSE').

2. Hasham Investment and Trading Company Private Limited (hereinafter referred to as the 'Acquirer' or ‘HITCPL’), filed an application dated August 20, 2014 with the Securities and Exchange Board of India (hereinafter referred to as 'SEBI') under regulation 11 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as the 'Takeover Regulations'), seeking exemption from the applicability of regulation 5 and 3(1) read with 3(3) of the Takeover Regulations with respect to proposed acquisition of shares of Target Company through scheme of arrangement involving certain promoter group companies of the Target Company. The application dated August 20, 2014 inter alia stated the following:

a. The Acquirer, HITCPL, is a private limited company incorporated on May 10, 1983. It is engaged in rendering investment advisory services to venture capital funds registered with SEBI.

a. The entire equity capital of the Acquirer is held by Azim Premji Trustee Company Private Limited in its capacity as trustee of Azim Premji Trust which is part of the promoter and promoter group of Target Company. Azim Premji Trustee Company Pvt Ltd also holds 42,97,14,120 equity shares representing 17.42 % in Target Company in its capacity as trustee of Azim Premji Trust.

Azim Premji Trustee Company Private Limited is in turn substantially wholly owned by Mr. Azim Hasham Premji with one share being held by Smt. Yasmeen A. Premji.

The Acquirer does not hold any shares and therefore has not been included as part of the promoter and promoter group.

b. As per the shareholding pattern of the Company as on March 31, 2014, the promoter and promoter group of the Target Company hold 73.47%, as per details below:

1 Azim Hasham Premji 9,34,05,100 3.79 2 Yasmeen A Premji 10,62,666 0.04 3 Rishad Azim Premji 6,86,666 0.03 4 Tariq Azim Premji 2,65,000 0.01 Napean Trading & Investment Company Pvt Ltd (Napean or 5 1,87,666 0.01 NTICPL) Vidya Investment & Trading Company Pvt Ltd (Vidya OR 6 1,87,666 0.01 VITCPL) Regal Investments & Trading Company Pvt Ltd (Regal OR 7 1,87,666 0.01 RITCPL) 8 Azim Premji Foundation (I) Pvt Ltd 1,08,43,333 0.44 9 Azim Hasham Premji Partner Representing Prazim Traders 45,29,06,791 18.36 10 Azim Hasham Premji Partner Representing Zash Traders 45,16,19,790 18.31 11 Azim Hasham Premji Partner Representing Hasham Traders 37,09,56,000 15.04 12 Azim Premji Trust 42,97,14,120 17.42 Total 1,81,20,22,464 73.47 b. Napean, Vidya and Regal are part of the promoter and promoter group of Target Company, individually holding 1,87,666 equity shares representing 0.01 percent of the total equity share capital of Target Company. Together they hold 5,62,998 equity shares comprising 0.03%. The equity shares of NTICPL are equally held by VITCPL and RITCPL. Likewise, the equity shares of VITCPL are equally held by NTICPL and RITCPL and the equity shares of RITCPL are equally held by NTICPL and VITCPL. Additionally each of NTICPL, VITCPL and RITCPL has issued 18 percent redeemable preference shares that are wholly held by the Acquirer.

c. Napean, Vidya and Regal are categorized as non-banking finance companies (‘NBFCs’) holding a valid certificate of registration issued by Reserve Bank of India (‘RBI’).

d. NTICPL is a partner in M/s Hasham Traders, VITCPL is a Partner in M/s Prazim Traders and RITCPL is a partner in M/s Zash Traders.

e. M/s Hasham Traders, M/s Prazim Traders and M/s Zash Traders are also part of the promoter and promoter group of Target Company, collectively holding 51.71% in the Target Company. Holding details of partnership firms in the Target Company are as follows-

Particulars No of equity shares % holding Hasham Traders 37,09,56,000 15.04 Prazim Traders 45,29,06,791 18.36 Zash Traders 45,16,19,790 18.31 Total 1,27,54,82,581 51.71 f. In terms of direction 20A of the Non-Banking Financial (Non-deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) directions, 2007 (introduced vide notification dated March 30 2011), no NBFC shall contribute to the capital of a partnership firm or become partner of such firm. Further, NBFCs which had already contributed to the capital of a partnership firm or was a partner in such firm as on the date of the notification were required to seek early retirement from such partnership firm.

In the light of the above direction of RBI, it has been proposed that NTICPL, VITCPL and RITCPL shall be merged into the Acquirer. The scheme of arrangement has also been filed with Hon'ble Karnataka High Court for approval. The proposed scheme shall assist in consolidating all the NBFC businesses of the promoter group into one legal entity namely HITCPL (the Acquirer).

Following the merger, the equity shares and 18 percent redeemable preference shares issued by NTICPL, VITCPL and RITCPL shall be cancelled. The assets including the interest in the equity shares of Target Company and the interest in the partnership firms (Hasham Traders, Prazim Traders and Zash Traders) and liabilities of these entities shall be transferred to Acquirer.

g. On completion of the scheme of arrangement, the partnership deed of each of M/s. Hasham Traders, M/s. Prazim Traders and M/s. Zash Traders shall stand reconstituted and HITCPL shall stand inducted as a partner in these three firms. However, the same would result in HITCPL qualifying as an NBFC which again would lead to it being non-compliant with the RBI Direction 20A. To meet the requirement, it was proposed that HITCPL on reconstitution of the partnership firms pursuant to the scheme of arrangement shall retire as a partner of the three partnership firms and concurrently a trust “Apex trust” (or such other name as may be determined) shall be admitted as a partner. HITCPL shall be a beneficiary of the Apex Trust. Azim Premji Trustee Company Private Limited is proposed to be appointed as the trustee of the Apex Trust.

h. The merger of NTICPL, VITCPL and RITCPL into Acquirer shall result in the Acquirer directly holding equity share of Target Company aggregating 5,62,998 equity shares representing 0.03 percent of the outstanding share capital of Target Company. The merger will also result in the reconstitution of the partnership firms, the partnership deed of each of M/s Hasham Traders, Prazim Traders and Zash Traders shall stand reconstituted and Acquirer shall stand inducted as the partner in these three firms, which together hold 51.71% equity share capital of Target Company.

i. The reconstitution of the partnership firm may be construed as change in control at each of Hasham Traders, Prazim Traders and Zash Traders, which would lead to an open offer in terms of regulation 5 read with regulation 3(1) and regulation 3(3) of the Takeover regulations. In this regard, it was submitted that – (i) Hasham Traders, Prazim Traders and Zash Traders shall continue to remain the shareholders of the target company and the equity shares of the target company shall be held by Mr. Azim Premji or any other partner in the firms for and on behalf of these partnership firms. (ii) The scheme of arrangement is only an internal re-organization of the promoter and promoter group and among entities that are directly or indirectly wholly controlled by Mr. Azim H. Premji and members of his family.

(iii) Consequently, there is no change in the control or management of the target company.

j. In view of the above, the Acquirer sought exemption as mentioned above.

3. Thereafter, vide letter dated September 02, 2015, the Acquirer, while reiterating the contents of the application inter alia submitted that Napean, Vidya and Regal, the three NBFCs, have since merged into HITCPL (the Acquirer) pursuant to the sanction of the scheme of Amalgamation by the Hon’ble High Court of Karnataka vide order dated March 26, 2015, with April 01, 2014 as the “Appointment Date”. It was also stated that on filing of the said orders with the Registrar of Companies, the scheme of amalgamation has become effective on April 07, 2015 and NTICPL, VITCPL and RITCPL have dissolved without the process of winding up. It was also submitted that pursuant to the scheme of amalgamation, the shares of the target company which were held by the three NBFCs have vested in HITCPL and also that in the three partnership firms – Hasham Traders, Prazim Traders and Zash Tarders, HITCPL has substituted NTICPL, VITCPL and RITCPL respectively. The Acquirer also submitted the following grounds in respect of its request for exemption:

(i) NTICPL, VITCPL and RITCPL, the transferor companies in the Scheme of Amalgamation, held each other’s shareholding, whereas Acquirer the transferee company is held by Azim Premji Trustee Company Private Limited in its capacity as trustee of Azim Premji Trust. Regulations 10(1)(d)(iii) exempts a scheme where the persons directly or indirectly holding 33% of the voting rights in the combined entity are the same as the persons who held the entire voting rights before the implementation of the scheme. In the present case, while Acquirer, pre and post-merger, is fully held by Azim Premji Trustee Company Private Limited in its capacity as trustee of Azim Premji Trust, NTICPL, VITCPL and RITCPL (the transferee companies) pre-merger were not, directly or indirectly, held entirely by Azim Premji Trustee Company Private Limited in its capacity as trustee of Azim Premji Trust.

(ii) Change in the partner of a partnership firm is not specified under the general exemptions provided under regulation 10. However, there is no change in the number of shares in Wipro Limited which the partnership firms are holding.

The above changes have occurred on account of operation of law, which is not specified under the general exemptions under regulation 10. It was reiterated that there is no change in control of the target company on account of the scheme of amalgamation.

4. Recommendation of the Takeover Panel: In view of the above, the said application and submissions were referred to the Takeover Panel, in terms of regulation 11(5) of the Takeover Regulations, for their recommendation. The Takeover Panel, vide Report dated October 05, 2015, recommended as under: “………. it was observed that pursuant to the merger only an entity which is fully owned and controlled by Azim Premji Trust would directly/indirectly acquire shares of the target company and thus, there is no real change in ownership or control of the shares of the target company. Further, the proposed scheme has also been approved by the Hon'ble High Court of Karnataka. In view of the above, the case was recommended for exemption.”

5. I have considered the application, the submissions/undertaking made in the subsequent correspondence from the Acquirers and the recommendation of the Takeover Panel. As per the application, the proposed scheme and transaction is for complying with the RBI direction and is only an internal re-organization of the promoter and promoter group and among entities that are directly or indirectly wholly controlled by Mr. Azim H Premji and members of his family. It is submitted by the Acquirer that the Hon'ble Karnataka High Court has sanctioned the scheme of amalgamation vide its order dated March 26, 2015 and also directed that the transferor companies (NBFCs) stand dissolved without the process of winding up and amalgamated with the Acquirer. The Acquirer has also stated that it has substituted the entities that have merged into it in the three partnership firms and that the shareholding of the merged entities also vested in it.

6. As per the Shareholding Pattern of the Company for the quarter ended September 2015, it is noted that HITCPL holds 5,62,998 shares (0.02%) in the Target Company. As per the application, the Acquirer has stated that the following are its PACs in the proposed transaction: (a) Azim Hasham Premji (b) Yasmeen A. Premji (c) Rishad Azim Premji (d) Tariq Azim Premji (e) Azim Premji Foundation (I) Limited (f) Azim Premji Trust (g) Azim Premji representing Prazim Traders (h) Azim Premji representing Zash Traders, and (i) Azim Premji representing Hasham Traders.

The above persons/entities form part of the promoter and promoter group of the Company as per the above said shareholding pattern. The Acquirer is 100% held by Azim Premji Trustee Company Private Limited in its capacity as trustee of Azim Premji Trust, which is also part of the promoter and promoter group of the Company.

7. As regards the partnership firms, I note that the Acquirer holds 35% share of profits, along with its subsidiary in each of the three firms, as it replaced the three NBFCs which were amalgamated into itself pursuant to the sanction of the scheme of arrangement by the Hon’ble High Court. As it is stated that the three partnership firms shall continue to remain the shareholders of the Target Company and the equity shares in the Target Company shall continue to be held by Mr. Azim Premji or any other partner in the firms for and on behalf of these partnership firms, it is clear that the Acquirer can, directly (exercise 0.02%) and indirectly (through Prazim Traders, Hasham Traders and Zash Traders – together holding 51.64% in the target company), exercise 51.66% of shares/voting rights in the Company and be obligated to make an open offer for such acquisition under regulations 3(1) read with 3(3) and 5 of the Takeover Regulations, unless exempted by SEBI from such obligation.

8. The Acquirer has also proposed that on reconstitution of the partnership firms (which action has already taken place), it would retire as a partner from the three partnership firms and concurrently a trust “Apex Trust” shall be admitted as a partner and that the Acquirer shall be its beneficiary. It was also proposed that Azim Premji Trustee Company Private Limited would be the Trustee of the said Apex Trust. I also note that there is no change in the public shareholding and the Company shall continue to be in compliance with the minimum public shareholding requirements under the SCRR and the Listing Agreement.

9. Considering the foregoing and the factors that there is no change in the control or management of the target company post the proposed transaction and that it is only an internal re-organisation of the promoter and promoter group and amongst entities that are directly or indirectly controlled by Azim Premji and members of his family, and the recommendation of the Takeover Panel to grant exemption, I am of the view that exemption as sought for in the application may be granted.

10. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with regulation 11(5) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereby grant exemption to the Acquirer, Hasham Investment and Trading Company Private Limited, from complying with the requirements of regulations 5 read with 3(1) and 3(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 with respect to the acquisition of shares of Target Company, as proposed in the Application dated August 20, 2014, subject to the Acquirer complying with the statements and undertaking made in its Application.

11. The exemption granted above is limited to the requirements of making open offer under regulation 5 read with regulations 3(1) and 3(3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and shall not be construed as exemption from the disclosure requirements under Chapter V of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992/2015, the Listing Agreement/Regulations or any other applicable Acts, Rules and Regulations.

12. Accordingly, the application dated August 20, 2014, filed by Hasham Investment and Trading Company Private limited is disposed off.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date: February 03, 2016 Place: Mumbai