A recent SEBI order has granted an exemption to Educomp’s CMD, Mr. Shantanu Prakash from having to make an open offer in relation to an acquisition of 7.5% of the shareholding of Educomp. At the outset, we should look at the facts in this case which are quite peculiar – Educomp’s CMD, Mr. Shantanu
Prakash had pledged 91.8 lakh shares (7.5% of the share capital) of
Educomp as security with Macquarie against a loan of Rs 46 crores.
Macquarie had invoked the pledge on account of fall in collateral cover
and transferred the pledged shares in its name. However, Macquarie did
not sell these shares and once the loan was re-paid in full, it sought
to transfer the shares to Mr. Prakash. Mr. Prakash approached SEBI for
an exemption from making an open offer under Regs 3(2) & 3(3) of the
Takeover Regulations 2011.
Prakash had pledged 91.8 lakh shares (7.5% of the share capital) of
Educomp as security with Macquarie against a loan of Rs 46 crores.
Macquarie had invoked the pledge on account of fall in collateral cover
and transferred the pledged shares in its name. However, Macquarie did
not sell these shares and once the loan was re-paid in full, it sought
to transfer the shares to Mr. Prakash. Mr. Prakash approached SEBI for
an exemption from making an open offer under Regs 3(2) & 3(3) of the
Takeover Regulations 2011.
SEBI granted the requested exemption on
the grounds that (a) the said acquisition will not result in a change of
control/ management of Educomp, (b) there is no further payment of
fresh consideration for the said acquisition and it is merely a return
of shares pledged by the acquirer with the lender, (c) Educomp will
continue to be in compliance with the minimum public shareholding
requirements even pursuant to the said acquisition and (d) the proposed
acquisition would not affect or prejudice the interests of the public
shareholders of Educomp in any manner.
the grounds that (a) the said acquisition will not result in a change of
control/ management of Educomp, (b) there is no further payment of
fresh consideration for the said acquisition and it is merely a return
of shares pledged by the acquirer with the lender, (c) Educomp will
continue to be in compliance with the minimum public shareholding
requirements even pursuant to the said acquisition and (d) the proposed
acquisition would not affect or prejudice the interests of the public
shareholders of Educomp in any manner.
The order appears fairly logical keeping in mind that the Takeover Regulations 2011 generally exempts acquisitions of shares pursuant to invocations of pledges in the ordinary course of business, and also exempts certain acquisitions where there is no change in control.
