Did IIFL promoters trigger an open offer?

PALAK SHAH Mumbai | Updated on June 25, 2020 Published on June 25, 2020

The share price of IIFL, the Mumbai-based stock broker and financial services company, shot up nearly 10 per cent on Thursday as market players were certain that an open offer had been triggered by the company promoters.

As per a regulatory filing by IIFL on June 24, promoter holding and voting rights in IIFL had risen above the open offer trigger point of 25 per cent. It meant that promoters would have to announce an offer to acquire more shares from the markets, which saw IIFL’s share price hitting an upper circuit at ₹82.2 in a choppy market.

As per SEBI’s Substantial Acquisition of Shares and Takeover (SAST) rules, when promoter holding and voting right in the company crosses 25 per cent, it triggers an open offer. On June 24, IIFL said that its promoters had acquired a 0.12 per cent additional stake in the company, which took their holding to 25.06 per cent in the company from an earlier 24.94 per cent.

SEBI’s SAST says: “No acquirer shall acquire shares or voting rights in a target company, which taken together with shares or voting rights, if any, held by him or by person acting in concert with him in such target company, entitle them to exercise them 25 per cent or more of the voting rights in such target company unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations.”

IIFL’s announcement to the stock exchanges on June 24 said: “Shares carrying voting rights acquired.”

However, in a clarification to the BSE at 12.54 pm on June 25, the company said: “This is to clarify that the Promoter Group's voting rights in the Company has not exceeded 25 per cent and Promoter Group has no intent to acquire more than 25 per cent voting rights in the Company or make any public offer.”

Legal experts said the matter will have to be decided by SEBI. "Once the announcement is made, the ball is in SEBI's court. The takeover code says that even an expression of interest and not actual acquisition can trigger an open offer," a securities market lawyer told BusinessLine.

When contacted, an IIFL spokesperson said the company was also in the process of issuing another clarification to the exchanges shortly. An email query was not answered.

Published on June 25, 2020