Matrabhav Trust And Astha Trust, In Re (Acquisition Of Shares/ Voting Rights)

1. Sunteck Realty Limited (hereinafter referred to as ‘the Target Company’) is a company incorporated under the Companies Act, 1956, having its registered office at 5th Floor Sunteck Centre, Subhash Road, Vile Parle East, Mumbai - 400059. The equity shares of the Target Company are listed on the Bombay Stock Exchange Limited (hereinafter referred to as ‘BSE’) and the National Stock Exchange of India Limited (hereinafter referred to as ‘NSE’).

2. Mr. Kamal Khetan and Ms. Manisha Khetan, in their capacity as the Trustees of Matrabhav Trust and Astha Trust (hereinafter referred to as the ‘Acquirers’/‘Trusts’), has filed an application dated January 24, 2014, with Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) under regulation 11 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as the ‘Takeover Regulations’), seeking exemption from the applicability of regulation 3(1) of the Takeover Regulations, with respect to the proposed acquisition of 2,89,01,937 (45.90%) equity shares of the Target Company by the Acquirers from Mr. Kamal Khetan, Ms. Manisha Khetan and Kamal Khetan HUF (hereinafter collectively referred to as the ‘Transferor’). The Acquirers are the family trusts settled on August 27, 2013. Ms. Shanti Khetan is the Settlor of both the Acquirers. Mr. Kamal Khetan and his wife Ms. Manisha Khetan are the trustees of both the Acquirers. The beneficiaries of the Matrabhav Trust are Mr. Kamal Khetan, Ms. Anupma Khetan and Master Akrur Khetan. The beneficiaries of Astha Trust are Ms. Manisha Khetan, Ms. Anupma Khetan and Master Akrur Khetan.

3. The application dated January 24, 2014 and the subsequent communications dated March 27, 2014, March 30, 2014, June 04, 2014, June 12, 2014 and July 03, 2014, in response to the queries of SEBI, inter alia stated the following:

a. The promoters/promoter group of the Target Company together hold 73.49% of the equity share capital of the Target Company. The Transferors are part of the promoter group of the Target Company and holds 4.74%, 38.51% and 2.65% respectively of the equity shares of the Target Company.

b. The Acquirers are settled on August 27, 2013. The Settlor of the trusts is the mother of Mr. Kamal Khetan and mother-in-law of Ms. Manisha Khetan. She is grandmother of Ms. Anupma Khetan and Master Akrur Khetan.

c. As per the private family arrangement, in order to re-align the Khetan family's shareholding in the Target Company and with a view to facilitate succession planning, Mr. Kamal Khetan and Kamal Khetan HUF have proposed to transfer the respective holding in the Target Company to Astha Trust and Ms. Manisha Khetan has proposed to transfer her holding to Matrabhav Trust by way of a gift through an off-market transaction.

d. The Acquirers will be regarded as a person acting in concert with the promoters in terms of regulation 2(q) of the Takeover Regulations, being part of the promoter or promoter group.

e. The Acquirers are not persons disclosed as promoter in the shareholding pattern filed by the Target Company in terms of the listing agreement for not less than 3 years prior to the date of the proposed acquisition.

4. According to the Acquirers, the shareholding of the Transferors i.e. 45.90% will be transferred to the Acquirers. The proposed acquisition would increase the holding of Matrabhav Trust from 0% to 38.51%. The discussed acquisition would also increase the holding of Astha Trust from 0% to 7.39%. If both the acquisitions are clubbed together the total shareholding of Acquirers will increase from 0% to 45.90% in the Target Company, thus triggering regulation 3(1) of the Takeover Regulations. The application has been made in respect of the said acquisitions in the Target Company, seeking exemption from making an open offer in terms of the regulation 3(1) of the Takeover Regulations, on the following grounds:

a. The total number of equity shares issued, subscribed and paid up as on December 31, 2013 is 6,29,66,207 equity shares. The total equity share capital/voting rights of the Target Company before and after the proposed acquisition will remain the same i.e. 6,29,66,207 equity shares.

b. The Transferors (i.e. Mr. Kamal Khetan, Ms. Manisha Khetan and Kamla Khetan HUF) forms the part of promoter group alongwith the Settlor, Trustees and Beneficiaries of the Acquirer Trusts.

c. The Transferors and persons acting in concert with the Transferors are directly in control of the Acquirers, as Ms. Manisha Khetan and Mr. Kamal Khetan are the Trustees of the Matrabhav Trust and Astha Trust, hence there will be no change in control of the Target Company after the proposed acquisition. The change in the identity of the persons who will exercise voting rights over the Target Company through Matrabhav Trust and Astha Trust, will only be between persons who, in their personal capacities, are promoters of the Target Company.

d. The proposed acquisition is only a part of the internal re-alignment of holdings within the Khetan family and will not affect the interests of the public shareholders of the Target Company.

e. There will be no change in the shareholding pattern and management of the Target Company, pre and post the proposed acquisition.

f. There is no fresh acquisition of shares by the promoter group and the pre-acquisition and post acquisition shareholding of the promoter group in the Target Company would remain the same i.e. at 73.49%.

g. The transaction will be a non-commercial transaction which will not prejudice the interest of the public shareholders of the Target Company, in any manner.

h. The Acquirers will be regarded as a person acting in concert with the promoters in terms of the regulation 2(q) of the Takeover Regulations.

5. Later vide email dated June 12, 2014, the Acquirers have submitted that on further reading of the Takeover Regulations, the Trusts would like to seek an exemption from the regulation 3(2) of the Takeover Regulations.

6. I have considered the application, the submissions/undertaking made in the subsequent correspondence from the Acquirers and material available on record. The Acquirers have proposed to acquire 45.90% shares/voting rights in the Target Company from the promoters of the Target Company, namely, Mr. Kamal Khetan, Ms. Manisha Khetan and Kamla Khetan HUF. The proposed transfer to the Acquirers is intended to streamline Khetan family's shareholding in the Target Company and facilitate succession planning and welfare of Khetan family. The said acquisition would result in the increase of the individual shareholding of the Matrabhav Trust from 0% to 38.51% and of Astha Trust from 0% to 7.39%. As per the shareholding pattern of the Target Company as on the date of application, i.e. January 24, 2014, the total shareholding of the promoter group was 73.49%. Out of the above, the Transferors together holds 45.90% and other promoter group entities collectively hold 27.59%. The other shareholders in the promoter group are Mr. Akrur Khetan, Ms. Anupam Khetan, Ms. Shanti Khetan, Satguru Infocorp Services Pvt. Limited, Starlight Systems Pvt. Limited, Sanchit Derivatives Pvt. Limited, Samagra Wealthmax Pvt. Limited and Paripurna Trust. The proposed transfer of shares would be by way of gift to the aforesaid Trusts. The shareholding pattern of the promoters and promoter group of the Target Company (before and after the acquisition), are as under:

TABLE A

Promoter and Promoter group Before the proposed acquisition Proposed Transaction After the proposed acquisition No. of shares % of share capital No. of shares % of share capital Manisha Khetan (Transferor) 2,42,51,407 38.51 -38.51% 0 0 Kamal Khetan (Transferor) 29,82,167 4.74 -4.74% 0 0 Kamal Khetan HUF (Transferor) 16,68,363 2.65 -2.65% 0 0 Matrabhav Trust (Acquirer) 0 0 38.51% 2,42,51,407 38.51 Astha Trust (Acquirer) 0 0 7.39% 46,50,530 7.39 Others (promoter group other that Transferors) 1,73,69,128 27.58 0 1,73,69,128 27.58% Total 4,62,71,065 73.49 - 4,62,71,0650 73.49

7. I note that the Acquirers are private family trusts settled by Ms. Shanti Khetan, one of the promoters of the Target Company. The Transferors are the promoters of the Target Company and fall within the definition of ‘promoter group’ under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and the Acquirers would become part of the promoter group pursuant to the proposed acquisition. Therefore, the Acquirer would be regarded as a person deemed to be acting in concert with the promoters of the Target Company in terms of regulation 2(1)(q)(2) of the Takeover Regulations. The shareholding of the promoter group excluding the shareholding of Mr. Kamal Khetan, Ms. Manisha Khetan and Kamla Khetan HUF is 27.59%. Pursuant to the proposed transaction, the shareholding of the Acquirers would increase from 0.00% to 45.90%. The same would increase the shareholding of the promoter group (excluding the shareholding of Mr. Kamal Khetan, Ms. Manisha Khetan and Kamla Khetan HUF) from 27.59% to 73.49%. The above increase from 27.59% to 73.49% is beyond 5% thereby triggering regulation 3(2) of the Takeover Regulations.

I also note that as the Acquirers do not hold any shares in the Target Company prior to the proposed acquisition. Pursuant to the proposed transaction, the shareholding of the Acquirers would increased from nil to 45.90% in the Target company. Accordingly, the Acquirers would also be under an obligation to make an open offer as required under regulation 3(1) of the Takeover Regulations unless exempted by SEBI.

8. As stated above, the beneficiaries of the Matrabhav Trust are Mr. Kamal Khetan, Ms. Anupma Khetan and Master Akrur Khetan. The beneficiaries of the Astha Trust are Ms. Manisha Khetan, Ms. Anupma Khetan and Master Akrur Khetan. The Trustees of both these Trusts are Mr. Kamal Khetan and his wife Ms. Manisha Khetan. It is submitted by the applicants, Mr. Kamal Khetan and his wife Ms. Manisha Khetan, the Trustees of both Matrabhav Trust and Astha Trust, that the transferors along with the Settlor, Trustees and beneficiaries of the Acquirer Trust form part of the promoter group of the Target Company. Pursuant to the proposed transfer, the transferors (i.e., Ms. Manisha Khetan, Mr. Kamal Khetan and Kamal Khetan HUF) instead of holding shares in their names shall hold the same through the family trusts. Further, the proposed transfer of shares is not being done to third parties but to private family trusts. It has been stated in the application that the proposed transfer to the Acquirers is to streamline the shareholding of the Khetan family in the Target Company and facilitate succession planning and welfare of the Khetan family.

I also note that there would be no change in the shareholding of the public in the Target Company pursuant to the proposed transaction and therefore may not be prejudicial to their interests in the Target Company. I note that there would be no change in the management or control of the Target Company as a result of the proposed transaction between the Acquirers and the Transferors.

Considering all such factors, I am of the view that the Acquirers could be exempted from the open offer obligations mandated under regulation 3(1) and 3(2) of the Takeover Regulations in respect of the proposed acquisition of shares/voting rights in the Target Company.

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 Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, hereby grant exemption to the proposed Acquirers, namely, Matrabhav Trust and Astha Trust from complying with the requirements of regulations 3(1) and 3(2) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 with respect to their proposed acquisition of 2,89,01,937 equity shares (constituting 45.90%) of the Target Company namely Sunteck Reality Limited by way of gift.

10. The exemption so granted is subject to the following conditions:

a. The proposed acquisition shall be in accordance with the relevant provisions of the Companies Act, 2013 and other applicable laws and shall be completed within 30 days from the date of this Order and the Acquirers shall file a report with SEBI in the manner provided in SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 within 21 days from the date of the acquisition;

b. The statements/averments made or facts/figures given in the application and in the subsequent correspondence by the Acquirers are true and correct to their best knowledge;

c. In case there is any change in the trustees or beneficiaries of the Trusts (Acquirers) mentioned in exemption application, same will be subject to compliance with the Takeover Regulations.

d. The Acquirers/Target Company shall ensure compliance with the statements, disclosures and undertakings made in the application and in their subsequent correspondence.

11. The exemption granted above is limited to the requirements of making open offer under regulations 3(1) and 3(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and shall not be construed as exemption from the disclosure requirements under Chapter V of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992, the Listing Agreement or any other applicable Acts, Rules and Regulations.

12. Accordingly, the application dated January 24, 2014, filed by Mr. Kamal Khetan and Ms. Manisha Khetan on behalf of the Matrabhav Trust and Astha Trust is disposed off.