SEBI exempts Emmbi family trusts from open offer rules

This order grants an exemption to the Rinku Appalwar Business Trust and Makrand Appalwar Business Trust from the mandatory open offer requirements under SEBI's Takeover Regulations for their proposed acquisition of shares in Emmbi Industries Limited. SEBI examined whether this transfer, described as a succession planning exercise among family members, warranted an exemption from regulations 3, 4, and 5 of the SAST Regulations, 2011.

Who it concerns: Emmbi Industries Limited (Target Company), Rinku Appalwar Business Trust, Makrand Appalwar Business Trust, Mrs. Rinku Makrand Appalwar, Mr. Makrand Moreshwar Appalwar, Ms. Maithili Rinku Makrand Appalwar, Emmbi Laboratories Private Limited, and Maithili Agrotech Private Limited.

What SEBI found or ordered

• SEBI granted an exemption from the applicability of regulations 3(2), 4, and 5 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
• The proposed acquisition involves the direct and indirect transfer of shares and voting rights from promoters to the Acquirer Trusts.
• Rinku Trust proposes to acquire 12.31% of Emmbi Industries shares and 16% of Emmbi Laboratories Private Limited (ELPL) shares.
• Makrand Trust proposes to acquire 19.96% of Emmbi Industries shares and 74% of ELPL shares.
• SEBI noted that the acquisition is for succession planning and that the ultimate beneficial interest remains with the current promoter group.
• The order relies on the Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2023/31 dated February 16, 2023, regarding conditions for such exemptions.

Also in the document

• The transaction is characterized as a 'mirror image' of the promoters' holdings, meaning no change in ownership or control is expected.
• The trusts are irrevocable, discretionary, private trusts settled under the Indian Trusts Act, 1882.
• The exemption is based on the finding that the trustees and beneficiaries are the promoters or their immediate relatives/lineal descendants.