SEBI exempts family trusts from takeover offer rules in Tega Industries case

The acquisition is described as a gift transfer among family members to facilitate succession without changing the overall control of the company.

Who it concerns: Tega Industries Limited (Target Company), Mehul Mohanka Benefit Trust (Acquirer Trust 1), MM Business Trust (Acquirer Trust 2), Nihal Fiscal Services Private Limited (NFSPL), and the Mohanka family members (Manish Mohanka, Madan Mohan Mohanka, Manju Mohanka, Mehul Mohanka).

What SEBI found or ordered

• SEBI granted exemption from sub-regulation (1) of regulation 3 and regulation 5 read with regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
• The proposed acquisition involves the direct transfer of 72,78,925 shares (9.69%) from Manish Mohanka to MM Business Trust by way of gift.
• The proposed acquisition involves the indirect transfer of 99.96% of NFSPL shares (which holds 49.71% of Tega Industries) to Mehul Mohanka Benefit Trust by way of gift.
• The total equity share capital of Tega Industries Limited is INR 75,12,76,980.
• The transfer is stated to be without any consideration (gift).
• The order notes that the total promoter shareholding remains unchanged at 67.27% and public shareholding remains at 32.73% after the acquisition.

Also in the document

• The acquisition is structured as a 'mirror image' of existing promoter holdings, intended for intergenerational succession rather than a change in control.
• The trusts are irrevocable and discretionary private trusts settled under the Indian Trusts Act, 1882.
• The order cites compliance with conditions in SEBI Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2023/31 regarding family trusts.