1. UCO Bank (hereinafter referred to as “the Target Company” or “the Bank”) is a public sector bank, having its registered office at BTM, Sarani, Barbourne Road, Kolkata-700001. The shares of the Bank are listed on the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”).

2. The Target Company filed an application dated January 18, 2014 with the Securities and Exchange Board of India (hereinafter referred to as “the SEBI”), on behalf of its promoter, the Government of India (hereinafter referred to as “the GoI”), under regulation 11(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as “the Takeover Regulations”), seeking exemption for the GoI from the applicability of regulation 3(2) of the Takeover Regulations in respect of its proposed acquisition of 26,20,80,580 shares through conversion of Rs. 1,823 crore Perpetual Non-Cumulative Preference Shares (“PNCPS”) (1,82,300 PNCPS of Rs. 1,00,000 each) and proposed preferential allotment of equity shares against the proposed capital infusion to the tune of Rs. 200 crore. The application inter alia stated the following:

a) The authorised capital of the Bank Rs. 3,000 crore and the paid-up capital as on March 31, 2013 was Rs. 2,575.62 crore consisting of equity share capital of Rs. 752.62 crore and PNCPS of Rs. 1,823 crore. The existing PNCPS of aggregating to Rs. 1,823 crore are held by the GoI.

b) The GoI is holding 52,12,52,709 shares i.e 69.26% of the equity share capital of the Bank.

c) The Bank vide letter dated February 01, 2013, inter alia requested the GoI for conversion of the existing PNCPS of Rs. 1,823 crore into equity shares to improve Common Equity Tier - I of the Bank to meet the requirement under Basel-III. Considering such request of the Bank, the GoI through the Ministry of Finance, vide letter dated January 06, 2014, has conveyed the decision to convert the existing PNCPS to the tune of Rs. 1,823 crore into equity shares, in favour of the GoI subject to the approval of the shareholders, SEBI and other authorities. The GoI in its afore-mentioned letter has also advised that the entire process be completed in the financial year 2013-2014.

d) Vide another letter dated October 22, 2013, the GoI through the Ministry of Finance has conveyed infusion of capital to the tune of Rs. 200 crore in the Target Company as preferential equity in favour of the GoI.

e) As the difference between the post-allotment and pre-allotment shareholding of the GoI in the Bank may be over 5%, the GoI vide letter dated October 31, 2013, has advised the Bank to seek exemption (from SEBI) from the obligation of making an open offer under the Takeover Regulations.

f) The Board of Directors of the Bank, in their meeting held on November 08, 2013, approved the preferential allotment of equity share to the tune of Rs. 200 crore. In another meeting held on January 07, 2014, the Board of Directors of the Bank, approved the conversion of the existing PNCPS to the tune of Rs. 1,823 crore into equity shares of the bank.

g) The ‘Relevant Date’ is January 10, 2014 for ascertaining the issue price to arrive at the quantity of shares to be issued pursuant to the conversion of PNCPS and allotment on the preferential basis. The issue price has been fixed at Rs. 77.19 per equity share, which is calculated as per regulation 76(1) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (“the ICDR Regulations”). Based on the issue price, the total number of shares that would be offered to GoI is 26,20,80,580 equity shares [i.e Rs. 59,10,092 equity shares (against the capital infusion of Rs. 200 crore) and 23,61,70,488 equity shares (by conversion of 1,82,300 PNCPS)]. Accordingly, the post the conversion and preferential issue, the GoI would be holding 78,33,33,289 equity shares (i.e 77.20%).

h) The proposed conversion of PNCPS into equity shares and the preferential issue of equity shares would not have any change in the control in the management of the Bank.

i) As the proposed conversion of PNCPS into equity shares and the preferential issue would increase the shareholding of GoI by 7.94% (which is more than 5% in a financial year) during the financial year 2013-2014, the exemption is sought from the applicability of regulation 3(2) of the Takeover Regulations.

3. I have considered the application made by the Bank on behalf of the GoI, the documents enclosed thereto and other material available on record. The GoI (a shareholder of the Target Company under the category ‘Promoter and Promoter Group’), which is the proposed acquirer, presently holds 52,12,52,709 shares in the Bank, which constitutes 69.26% of the total number (75,26,28,583 shares) of equity shares of the Bank.

4. I note from the letter dated October 22, 2013 (letter from the Ministry of Finance, GoI to the Target Company) that the GoI has decided to infuse capital to the tune of Rs. 200 crore in the Target Company by way of preferential allotment of equity in favour of the GoI. The Target Company has submitted that, pursuant to the said decision of the GoI, its Board of Directors, in the meeting held on November 08, 2013, had approved raising of additional equity capital to the extent of Rs. 200 crore through the issue of equity shares in favour of GoI on preferential basis.

Further, I note that vide another letter dated January 06, 2014 (letter from the Ministry of Finance, GoI to the Target Company), the GoI has approved the conversion of PNCPS held by it in the Bank to the tune of Rs. 1,823 crores, into equity share in favour of GoI, subject to the approval of shareholders, SEBI and other authorities.

The Board of Directors of the Bank, in their meetings held on November 08, 2013 and January 07, 2014 has approved the preferential allotment of equity shares to the tune of Rs. 200 crore and the proposed conversion of the existing PNCPS to the tune of Rs. 1,823 crore into equity shares of the bank respectively. I note that an Extra-Ordinary General Meeting (“EGM”) of the shareholders was convened on February 11, 2014 and the resolutions of raising of additional equity capital to the extent of Rs. 200 crore through the issue of fresh equity shares on preferential basis in favour of GoI and the conversion of PNCPS into the equity shares were approved.

5. I note that the issue price has been fixed at. Rs. 77.19 per equity share of Rs. 10 each as per regulation 76(1) of the ICDR Regulations, taking into consideration “January 10, 2014” as the ‘relevant date’. Accordingly, the Target Company has resolved to allot 26,20,80,580 equity shares to the GoI pursuant to the conversion of PNCPS and allotment of fresh equity shares on preferential basis. The proposed allotment of 26,20,80,580 equity shares of the Target Company to the GoI would increase the shareholding of the GoI (in the Target Company) from 69.26% to 77.20%. This resultant increase in the shareholding/voting rights of the GoI would be around 7.94%, which mandates an open offer under the provisions of regulation 3(2) of the Takeover Regulations, unless the same is exempted under regulation 11 of the Takeover Regulations. Accordingly, the Target Company on behalf of GoI, has sought exemption from the applicability of the said regulation.

6. The shareholding pattern of the Target Company as mentioned in the application and the shareholding pattern post the proposed issue of fresh equity shares on preferential basis and conversion of PNCPS, is given in the following table:

Shareholding pattern in the Target Company Category Pre-conversion Post issue of equity through proposed preferential issue and conversion of PNCPS No of shares Percentage No of shares Percentage Promoter Group (GoI) 52,12,52,709 69.26 78,33,33,289 77.20 FIs/banks 11,00,27,336 14.62 11,00,27,336 10.84 FIIs/NRIs/OCB 4,29,17,038 5.70 4,29,17,038 4.23 Public 7,84,31,500 10.42 7,84,31,500 7.73 Total 75,26,28,583 100.00 1,01,47,09,163 100.00

7. I note that the conversion of PNCPS and the issue of fresh equity shares on preferential basis in favour of the GoI would enable the Target Company to achieve the Tier I CRAR in accordance with the Basel III guidelines. I also note that even after the proposed increase in the shareholding of GoI in the Target Company pursuant to the proposed issue of fresh equity shares on preferential basis and conversion of PNCPS, the minimum public shareholding as stipulated in rule 19A(3) of the Securities Contracts (Regulation) Rules, 1957, would be maintained. Further, there would not be any change in the management control in the Target Company pursuant to the proposed transaction.

8. Considering the proposed issue of fresh equity shares on preferential basis and conversion of PNCPS to the tune of 26,20,80,580 equity shares in favour of the GoI, the reasons stated by the Target Company and the observations made above, I am of the considered view that this is a fit case to grant exemption under regulation 11 of the Takeover Regulations to the GoI from the obligation to make an open offer under regulation 3(2) of the Takeover Regulations with respect to its proposed increase of shares/voting rights from 69.26% to 77.20%.

9. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 11(5) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereby grant exemption to the proposed acquirer, the Government of India, from complying with the requirements of regulation 3(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, with respect to its proposed acquisition of 26,20,80,580 shares [i.e 2,59,10,092 equity shares (against the capital infusion of Rs. 200 crore) and 23,61,70,488 equity shares (by conversion of 1,82,300 PNCPS)] from the Target Company i.e, UCO Bank, which may increase the shareholding/voting rights of the Government of India in the Target Company from 69.26% to 77.20%. The exemption is granted subject to the following conditions:

(i) The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 1956, the Companies Act, 2013, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, the Listing Agreement and all other applicable laws.

(ii) The GoI/Target Company shall ensure compliance with the statements, disclosures and undertakings made in the application/other correspondence.

(iii) The exemption is only limited to the requirements of making open offer under regulation 3(2) of the Takeover Regulations, 2011 and shall not extend to other obligations (e.g disclosure requirements under Chapter V of the said Takeover Regulations, Listing Agreement or any other law) of the GoI/Target Company.

10. The application dated January 18, 2014 filed by the Government of India through the UCO Bank, is accordingly disposed off.