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SEBI has rejected the request for exemption from making an open offer from Neeman Family Foundation (Trust) in the case of Max Ventures and Industries (MVIL) and Max India (MIL). The Foundation is a family trust settled by Analjit Singh through a deed.
“It is evident that the indirect legal and beneficial owners of the shares and voting rights indirectly held by the Trust in MVIL will continue to be the individual promoters. Therefore, there is no change of ownership of 31.55 per cent promoter shareholding in MVIL as a result of the entire exercise,” the Trust told the Takeover Panel in 2017. Similarly, there is no change of ownership of the 40.85 per cent promoter shareholding in MIL as a result of the entire exercise, the Trust said in a separate filing.
After deliberations, the Takeover Panel noted that the policy on granting exemption in the Trust case, already provides that the exemption is available only when the name of the transferor/transferee is disclosed for a period of at least three years prior to the transfer.
Upholding the Takeover Panel’s earlier pronouncement, SEBI in its order said the promoter group holds 38.02 per cent of the equity shares and voting rights in the target company, of which 31.55 per cent is proposed to be held through Max Ventures Investment Holdings Pvt Ltd (MVIHPL).
The acquirer Trust holds nil equity shares and voting rights in the target company, as on the date of application. The acquirer Trust would be indirectly acquiring more than 25 per cent in the target company through MVIHPL since MVIHPL would be controlled by the acquirer Trust pursuant to implementation of the proposed merger schemes.
In the case of Max India, the promoter group holds 41.13 per cent of the equity shares and voting rights, of which 40.95 per cent is proposed to be held through MVIHPL, the market regulator observed.
Breaches threshold norms
“Accordingly, the proposed acquisition would, in normal course, breach the thresholds specified in Regulation 3(1) read with Regulation 5 of Takeover Regulations, thereby triggering the requirement to make an open offer,” said G Mahalingam, Whole-Time Member.
In 2015, Max India had announced a major corporate restructuring plan, leading to the splitting of the company into three separate listed companies.
Accordingly, Max India was renamed Max Financial Services focussing solely on life insurance activity, through its 72.1 per cent shareholding in Max Life; the second vertical, renamed Max India to manage investments in health and allied business; and the third vertical with investment activity in the group’s manufacturing subsidiary, Max Speciality Films, was renamed Max Ventures and Industries.
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