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On August 14, the Securities and Exchange Board of India (SEBI) granted an exemption to the promoters of PI Industries from the mandatory open offer requirement under the Takeover Regulations. This decision facilitates a smooth succession process by allowing the promoters to transfer their shares to three family trusts.
The application, submitted on May 15, 2024, involved the transfer of shares and voting rights in PI Industries to DoMane Family Trust, RCane Family Trust, Alpha Family Trust, and Beta Family Trust. The primary objective of this transfer is to streamline succession planning within the promoter family.
Salil Singhal and Shefali Khushalani sought to transfer 4.055% of their shares and voting rights to RCane Family Trust and another 4.055% to DoMane Family Trust. Similarly, Madhu Singhal and Pooja Singhal intended to transfer 4.055% of their shares to Alpha Family Trust and an additional 4.055% to Beta Family Trust. The beneficiaries of these trusts are the children and grandchildren of the transferors.
Following the transfer, the trusts will collectively hold 16.21% of PI Industries’ shares, while Mayank Singhal, Madhu Singhal, and Salil Singhal will retain approximately 29.87% of the shares. Public shareholders will continue to hold 53.9% of the shares and non-promoter, non-public shareholders will hold 0.01% of the shares, unchanged by the transaction.
SEBI’s order noted that the promoters showed the trusts would simply reflect the existing distribution of their holdings, ensuring no alterations in ownership or control over the shares or voting rights. The trusts will be managed by the promoters or their immediate relatives, and the beneficial interests of the trusts’ beneficiaries will remain unaffected. In the event of dissolution, the assets will be distributed solely to the beneficiaries or their legal heirs.
Given these considerations, SEBI concluded that an exemption from the open-offer requirement was warranted.