DEPUTY GENERAL MANAGER
DIVISION OF CORPORATE RESTRUCTURING
CFD/DCR/TO/SS/ 115312/08
January 28, 2008
Bhumika Trading Private Limited
147, 14th floor, Atlanta,
Nariman Point
Mumbai - 400021
Dear Sir,
Sub: Request for No action letter under the SEBI (Informal Guidance) Scheme, 2003- by Reliance Industries Ltd. on applicability of the provisions of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 {Regulations}.
Ref : Your letter dated October 18, 2007
1. Please refer to your letters quoted above, seeking no action letter under the SEBI (Informal Guidance) Scheme, 2003. The no action letter has been sought on the applicability of regulation 11(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 {“the Takeover Regulations”} in respect of and at the time of issue of warrants by Reliance Industries Limited (the target company) to its promoters and conversion of such warrants.
2. It is ,inter-alia informed by you vide your letters under reference, that :-
i. The shares of the target company are listed on BSE and NSE.
ii. Out of total equity shares of 145, 36, 48,601, the promoters of the target company currently hold 74, 18, 19,935 (51.03%) equity shares of the target company.
iii. By passing a special resolution by the shareholders of the target Company through postal ballot on March 29, 2007, the Target Company issued and allotted 12, 00, 00,000 warrants on preferential basis to the promoter group entitling them to apply for equivalent number of the equity shares of the company in one or more tranches, on April 12, 2007
iv. As per the said resolution, 12, 00, 00,000 equity shares will be arising out of the issue of warrants which were allotted to the promoters and the promoter group. As a result of this allotment, the equity share capital of RIL shall increase from 145, 36, 48,601 shares to 157, 36, 48,601 shares.
v. These warrants will be converted as under :-
a. 12,00,00,000 warrants are will be converted within 18 months from the date of allotment . Consequently, promoters’ holding in the target company would increase from 51.03% to 54.77%. After the conversion of the warrants the incremental increase in the promoter shareholding will be 3.74%.
3. Without necessarily agreeing with your analysis, our views on the proposed transactions as mentioned in para 2 above are as under :-
a) As per Regulations 11(1) of the Takeover Regulations, “No acquirer who, together with persons acting in concert with him, has acquired, in accordance with the provision of law, [15 percent or more but less than 55 percent] of the 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 Regulation.”
b) On perusal of your letters, we understand that pursuant to the conversion of warrants in one tranches, the promoters shareholding would go less than 5%.
c) In view of this, if at the time of conversion of warrants into equity shares by promoters of the company regulation 11(1) as it exists today prevails, the public announcement as required under this regulation would not be required as the acquisition of additional shares will be within the creeping limit of 5%.
4. This position is based on the representation made to the Division in your letter under reference. Different facts or conditions might require a different result. This letter does not express decision of the Board on the questions referred.
5. Please note that this position is only with respect to applicability of Takeover Regulations and does not affect applicability of any law and other SEBI Regulations, Guidelines and circulars administered by SEBI or any other authority.
Yours faithfully,
SOMA MAJUMDER