Order in the matter of Prozone Capital Shopping Centres Limited

WTM/PS/07/CFD-DCR-2/MAY/2014 SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER IN THE MATTER OF PROPOSED ACQUISITION OF EQUITY SHARES OF PROZONE CAPITAL SHOPPING CENTRES LIMITED - APPLICATION FILED UNDER REGULATION 11(1) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 2011 1. Prozone Capital Shopping Centres Limited (hereinafter referred to as the 'Target Company') is a company incorporated under the Companies Act, 1956 having its registered office at 105/106, Provogue House, Off New Link Road, Andheri, Mumbai – 400053. The equity shares of the Target Company are listed on the Bombay Stock Exchange Limited (hereinafter referred to as ‘BSE’) and National Stock Exchange of India Limited (hereinafter referred to as ‘NSE’).

2. Mr. Nikhil Anupendranath Chaturvedi, in his capacity as the Trustee of Nikhil Chaturvedi Family Trust (hereinafter referred to as the 'Acquirer' or ‘Trust’) has filed an application dated October 31, 2013 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 'Takeover Regulations'), seeking exemption from the applicability of Regulation 3(2) of the Takeover Regulations, with respect to the proposed acquisition of 1,40,50,955 (9.21%) equity shares of the Target Company. The Acquirer is a private family trust, settled on October 07, 2013. The settlor and trustee of the Acquirer is Mr. Nikhil Anupendranath Chaturvedi who is also a promoter of the Target Company. The beneficiaries of the Trust are Mr. Nikhil Anupendranath Chaturvedi's wife Ms. Shital Chaturvedi, his minor daughters Akanksha Chaturvedi and Anushka Chaturvedi and his bloodline descendants.

3. The application dated October 31, 2013 and the subsequent emails from Mr. Nikhil Anupendranath Chaturvedi dated December 26, 2013, January 14, 2014, January 20, 2014 and February 06, 2014 stated the following: a. Mr. Nikhil Anupendranath Chaturvedi owns 6.95% of the equity shares of the Target Company in his personal capacity and is a part of the promoter group of the Target Company.

b. Mr. Nikhil Anupendranath Chaturvedi is partner in Topspeed Trading Company LLP and Floro Mercantile LLP, both of which are part of the promoter group of the Target Company and hold 3.15% (i.e. 48,00,000 equity shares of the Target Company) and 4.09% (i.e. 62,40,000 equity shares of the Target Company) respectively. The partners of Topspeed Trading Company LLP and Floro Mercantile LLP, vide respective resolutions both dated October 22, 2013, proposed to transfer their entire holding amongst the partners either in their individual names or family trusts, in the ratio of partnership interest of the respective partners. c. Accordingly, Mr. Nikhil Anupendranath Chaturvedi who holds 31.15% in the share capital of both the LLPs, gives him the entitlement of 14,95,200 shares and 19,43,760 shares of the Target Company from Topspeed Trading Company LLP and Floro Mercantile LLP respectively. d. Mr. Nikhil Anupendranath Chaturvedi has proposed to transfer his holding in the Target Company (in his individual capacity as well his entitlements in the two LLPs) to the Acquirer by way of a gift/ settlement of shares, as a part of the private arrangement intended to streamline the succession and welfare of the Nikhil Chaturvedi Family. e. Pursuant to the proposed transfer of shares, the Acquirer would be considered as part of the promoter group of Target Company. f. There will be no change in the shareholding pattern of promoter/ promoter group of the Target Company.

4. According to the Acquirer, the shareholding of Mr. Nikhil Anupendranath Chaturvedi (hereinafter referred to as 'Transferor') in the Target Company i.e. 6.95% and holding through Topspeed Trading Company LLP and Floro Mercantile LLP i.e. 2.25% is proposed to be transferred to the Acquirer/ Nikhil Chaturvedi Family Trust by way of gift. It has been said that the beneficiaries of the trust are 'immediate relatives' of the existing promoter of the Target Company. Regulation 10(1)(a) of the Takeover Regulations, does not specifically envisage 'inter-se' transfer of shares amongst an existing promoter and a proposed family trust. The proposed acquisition would increase the holding of the Acquirer beyond 5% in a financial year. The application has been made in respect of the said acquisition in the Target Company, seeking exemption from making an open offer in terms of the Regulation 3(2) of the Takeover Regulations on the following grounds:

a. The promoter shareholding of the Target Company is 34.62% and Mr. Nikhil Anupendranath Chaturvedi has been declared as a promoter in the disclosure made to SEBI and the Stock Exchanges. b. Mr. Nikhil Anupendranath Chaturvedi holds 9.21% of shares (i.e. 6.95% in individual capacity and 2.25% through entitlements in the LLPs) in the Target Company. c. The Acquirer and the Transferor are part of the promoter group of the Target Company. The Trustee and the beneficiaries of the Acquirer are family members. d. The shareholding of the Target Company after the proposed acquisition shall be same, except that the said 9.21% of the issued, subscribed and paid up capital of the Target Company shall be held by the Acquirer. e. The proposed gift of 9.21% of shares of the Target Company to Acquirer by Transferor is an internal reorganization within the Transferor's family. f. There will be no change in control or management of the Target Company after the proposed acquisition. g. The proposed acquisition is non-commercial and the same will not prejudice the interests of the public shareholders of the Target Company.

5. I have considered the application of the Acquirer, the subsequent responses/ clarifications in respect of the queries of SEBI and material available on record. The Acquirer has proposed to acquire 9.21% shares/ voting rights in the Target Company from one of the promoters of the Target Company, Mr. Nikhil Anupendranath Chaturvedi. The reason for the proposed transfer to the Acquirer is an internal reorganisation within the Nikhil Chaturvedi Family. The said acquisition would result in the increase of the individual shareholding of the Acquirer from 0% to 9.21% in the Target Company. As per the shareholding pattern of the Target Company as on September 30, 2013, the total shareholding of the promoter group was 34.62%. The shareholding pattern of the promoter and promoter group (before and after the proposed acquisition) of the Target Company, is as under: Before the proposed Proposed After the proposed Promoter and Promoter group acquisition transaction acquisition Mr. Nikhil Anupendranath Chaturvedi (Transferor) 6.95% -6.95% 0 Share of Mr. Nikhil Anupendranath Chaturvedi in 0.98% -0.98% 0 Topspeed Trading Company LLP Share of Mr. Nikhil Anupendranath Chaturvedi in 1.27% -1.27% 0 Floro Mercantile LLP Nikhil Chaturvedi Family Trust (Acquirer) 0 9.21% 9.21% Others (promoter group other than Transferor) 25.41% 0 25.41% Total 34.62% - 34.62%

6. I note that the Acquirer is a private trust settled by the Transferor, one the promoter of the Target Company and falls within the definition of 'promoter group' under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and the Acquirer would become part of the promoter group pursuant to the proposed acquisition. Therefore, the Acquirer would be regarded as a person deemed to be acting in concert with the promoters of the Target Company in terms of Regulation 2(1)(q)(2) of the Takeover Regulations. The total promoter shareholding in the Target Company is 34.62%. The shareholding of the promoter group excluding the shareholding of Mr. Nikhil Anupendranath Chaturvedi and his entitlements from Topspeed Trading Company LLP and Floro Mercantile LLP is 25.41%. Pursuant to the proposed transaction, the shareholding of the Acquirer would increase from 0.00% to 9.21%. The same would increase the shareholding of the promoter group (excluding the shareholding of Mr. Nikhil Anupendranath Chaturvedi and his entitlements from two LLPs) from 25.41% to 34.62%. The above increase from 25.41% to 34.62% is beyond 5% thereby triggering regulation 3(2) of the Takeover Regulations. I note that there would be no change in the management or control of the Target Company and the above proposed transaction would not affect or prejudice the interests of the public shareholders of the Target Company.

7. In view of the foregoing, I consider the present case a fit one for granting exemption to the Acquirer from complying with the requirements of Regulation 3(2) of the Takeover Regulations.

8. Having regard to the above, 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 the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereby grant exemption to the proposed Acquirer, the Nikhil Chaturvedi Family Trust from complying with the requirements of Regulation 3(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 with respect to its proposed acquisition of 1,40,50,955 shares of the Target Company, namely Prozone Capital Shopping Centres Limited by way of gift.

9. The exemption is granted subject to the following conditions: a. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws and shall be completed within 30 days from the date of this order and the Acquirer shall file a report with SEBI in the manner provided in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 within 21 days from the date of the acquisition; b. The statements/ averments made or facts/ figures given in the application and in the subsequent correspondence by the said Acquirer are true and correct to its best knowledge; c. The Acquirer/Target Company shall ensure compliance with the statements, disclosures and undertakings made in the application and subsequent correspondences; and d. This exemption is limited to the requirements of making open offer under Regulation 3(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and shall not be construed as exemption from the requirements of disclosure required under Chapter V of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, compliance of SEBI (Prohibition of Insider Trading) Regulations, 1992, the Listing Agreement or any other applicable Acts, Rules and Regulations.

10. Accordingly, the application dated October 31, 2013, filed by Mr. Nikhil Anupendranath Chaturvedi on behalf of the Acquirer is disposed off.

DATE: MAY 15, 2014 PRASHANT SARAN PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA