Summary
Promoters could not count their earlier status in the demerged parent company towards the three-year period for the inter se transfer exemption applicable to the listed target company. The 2014 acquisitions were not exempt, and the Tribunal’s conclusion sustaining the higher open-offer price was upheld.
Issues
- Whether promoter continuity before demerger satisfied Regulation 10(1)(a)(ii)’s three-year target-company requirement.
Provisions considered
- Regulations 2(z) and 10(1)(a)(ii), SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011The relevant promoters must be named in the target company’s shareholding filings for at least three years; the period here ran from its July 2012 information memorandum. (¶ 10–12)
- Regulation 10(1)(a)(iii), SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011Express treatment of holding/subsidiary relationships contrasted with the separate conditions of clause (ii); the Court could not lift the veil to rewrite them. (¶ 19–21)
Held
- The relevant target was the listed Rattan company, not the earlier parent business. Three years had not elapsed before the July 2014 purchases, so the claimed exemption failed. (¶ 11–12)
- Committee reports and continuity of control could not displace clear regulatory words. Objects may assist where wording is ambiguous, but the language and contrasting clauses were clear here. (¶¶ 13–21, 26–29)
- Rent-control cases involving identity between firms and companies were distinguishable from a regulation expressly defining the relevant target and prescribing its filing history. (¶ 22–25)
Result
Appeals dismissed; Tribunal’s conclusion upheld, leaving the non-exempt acquisitions and resulting Rs.6.30-per-share offer-price requirement undisturbed.