Request for Interpretive Letter - Supreme Petrochem Ltd

GENERAL MANAGER

DCR/AG/1081 /04

January 16, 2004

Supreme Petrochem Limited

17/18, Shah Industrial Estate,

Veera Desai Road, Andheri (W)

Mumbai – 400 053

Dear Sirs,

Sub.: Request for Interpretive Letter under the SEBI (Informal Guidance) Scheme, 2003

Ref : Your letters dated December 17, 2003 and January 5, 2004

1. Please refer to your letters cited above, seeking Interpretive Letter under SEBI (Informal Guidance) Scheme, 2003. The Interpretive letter is sought on the issue as to whether the acquisition of the preferential shares by the promoters as stated would make them liable to make a public offer pursuant to regulation 11 of the Securities and Exchange Board of India (Substantial Acquisition of shares and takeovers) Regulations, 1997. If yes, what is the maximum number of shares that can be allotted to the promoters without making them so liable?

 

2. It is, inter-alia, informed by you that:-

 

3. Supreme Petrochem Limited (SPL)(target company) is a listed pubic limited company. The existing issued equity share capital of SPL and the holding of the promoters is as follows:

Issued equity shares 9,06,40,000 shares

Promoter’s Holding 5,10,05,200 shares (56.27%)

 

4. SPL convened the General Meeting on October 20, 2003 wherein the resolution authorizing preferential allotment to the Promoters was passed.

 

5. The Promoters have not acquired any shares since April 1, 2003 till date and they do not propose to acquire any further shares in the company during the current financial year ending on 31.03.2004 other than those issued under the proposed preferential allotment.

 

6. SPL now proposes, pursuant to the resolution passed by the members in the General Meeting, to issue 68,72,800 (7.04% of the enhanced capital) equity shares to the promoters on a preferential basis. The post issue capital and promoters’ holding will be as follows:

 

Post issue equity shares 9,75,12,800 shares

Promoters Holding 5,78,78,000 shares (59.35%)

 

7. The promoters are already in control of the company and pursuant to the aforesaid proposed acquisition, there would not be any change in control over the company.

 

8. The query is whether the acquisition of the preferential shares by the promoters as above would make them liable to make a public offer pursuant to regulation 11 of the Securities and Exchange Board of India (Substantial Acquisition of shares and takeovers) Regulations, 1997. If yes, what is the maximum number of shares that can be allotted to the promoters without making them so liable?

  

1.  
   1. Reference is drawn to the provisions of Regulation 11(1) of the captioned Regulations, which states as under:-

       

      1. Without necessarily agreeing with your analysis, it is observed from your submissions that pursuant to the proposed acquisition, the promoters will acquire 3.08% additional voting rights in the target company. Since the proposed acquisition of shares does not exceed the creeping acquisition limit of 5%, the provisions of the Regulation 11(1) of the captioned Regulations will prima-facie, not be attracted.

       

   "No acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provisions of law, [15 per cent or more but less than 75 per cent] of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him to exercise more than [5%] of the voting rights, [in any financial year ending on 31st March], unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations."

    

   The aforementioned Regulation provides that any acquirer cannot acquire more than 5% additional voting rights in one financial year unless he makes a public announcement to acquire the shares of the target company.

    

5.Further, the promoters are already in control of the company and pursuant to the aforesaid proposed acquisition, there will not be any change in control over the company. Therefore the provisions of the Regulation 12 of the captioned Regulations will prima-facie, not be attracted.

 

 

6.This position is based on the representation made to the Division in your letter. Different facts or conditions might require a different result. This letter does not express decision of the Board on the questions referred by you.

 

7.You may note that the above views are expressed only with respect to the clarification sought on SEBI (Substantial Acquisition and Takeovers) Regulations, 1997 and do not affect the applicability of any other law or requirements.

Yours faithfully,

S V MURALI DHAR RAO