Exemption Order in the Matter of Subros Limited Page 1 of 11

WTM/SM/CFD/ 52 / 2021-22

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

UNDER SECTION 11(1) AND SECTION 11(2) (h) OF THE SECURITIES AND

EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH REGULATION 11(5)

OF THE SECURITIES AND EXCHANGE BOARD OF INDIA

(SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS,

2011.

IN THE MATTER OF PROPOSED ACQUISITION OF SHARES AND VOTING

RIGHTS IN –

TARGET COMPANY Subros Limited

ACQUIRER J S Family Trust

1. Background –

1.1. Subros Limited (the “Target Company”) was incorporated on February 14, 1985

under the Companies Act, 1956 and has its registered office at Lower Ground Floor,

World Trade Centre, Barakhamba Lane, New Delhi - 110001.

1.2. The Target Company is engaged in the business of manufacturing and supply of

products to all major auto makers in the passenger and commercial vehicle space,

covering the Railways, and Home A/C applications. The shares of the Company

are listed on BSE and NSE since December 05, 1988 and July 13, 2005 respectively.

Exemption Order in the Matter of Subros Limited Page 2 of 11

2. The Application –

2.1. An application dated April 27, 2021 seeking exemption from the applicability of

Regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers)

Regulations, 2011 (the “Takeover Regulations, 2011”) in the matter of proposed

acquisition of shares in the Target Company was received by SEBI from J S Family

Trust (the “Proposed Acquirer/Acquirer Trust”). Subsequent to the receipt of the

above mentioned application dated April 27, 2021, further clarifications and

submissions have been received from the Acquirer Trust. Accordingly, the

application dated April 27, 2021 and subsequent replies thereto shall be collectively

referred to hereafter as the Application.

2.2. It is gathered from the Application that the Acquirer Trust has been instituted as a

private trust under the Indian Trusts Act, 1882 by way of a Trust Deed dated

February 23, 2021, subsequently amended by way of a Supplementary Trust Deed

dated November 30, 2021, for the benefit of the identified beneficiaries. The Settlor,

Trustees and Beneficiaries of the said Acquirer Trust are as under –

Table-1

Name of

Settlor

Name of

Trustees

Name of Beneficiaries Relationship between the Settlor

and Beneficiaries

1 Dr.

Jyotsna

Suri

1 Mrs. Divya

Suri Singh

2 Mrs. Ritu

Suri

1 (a) Ms. Tarini Singh Grand Daughter

1 (b) Master Sumer Singh Grand Son

2 Mrs. Shradha Suri Marwah Biological Daughter [Adopted

daughter of Mr. Ramesh Suri/Mrs.

Ritu Suri]

3 Mrs. Deeksha Suri Murti Daughter

4 Mr. Keshav Suri Son

Exemption Order in the Matter of Subros Limited Page 3 of 11

2.3. It has been submitted by the Acquirer Trust that the total issued share capital of the

Target Company was INR 130,482,900 representing 65,241,450 equity shares of INR

2 each. Similarly, the subscribed and paid-up equity share capital of the Target

Company, as on the date of the Application, was INR 130,471,000 representing

65,235,750 equity shares of INR 2 each. All the equity shares had uniform voting

rights and there were no calls in arrears in respect of the shares of the Target

Company.

2.4. It has been further submitted by the Acquirer Trust that, as per the shareholding

pattern for the quarter ending March, 2021, the promoters and members of the

promoter group held a total of 2,40,00,000 shares constituting 36.79 % of the paid

up equity shareholding in the Target Company.

2.5. In this regard, it has been proposed by the Acquirer Trust that it would acquire 2.48

% shares of the Target Company by way of gift from the following promoter, who

is part of the promoter and members of the promoter group of the Target Company:

Table -2

Name of Shareholders

Shareholding

No. of shares Shareholding & Voting

Rights (%)

Dr. Jyotsna Suri 16, 19,200 2.48 %

Total 16, 19,200 2.48 %

Exemption Order in the Matter of Subros Limited Page 4 of 11

2.6. It is seen from the Application that pursuant to the acquisition of shares and voting

rights, the Acquirer Trust along with other promoters and members of promoter

group shall directly hold voting rights of the Target Company, and post-acquisition

the overall shares held by the promoter and members of the promoter group of the

Target Company shall continue to be 36.79 %.

2.7. The shareholding of the Target Company before and after the proposed acquisition

is as under:

Table-3

Name of the Promoter Pre-transaction

shareholding %

Post-transaction

shareholding %

Ramesh Suri 6.84 6.84

Ritu Suri 1.73 1.73

Deeksha Holding Limited 15.54 15.54

Jyotsna Holding Pvt. Ltd 5.28 5.28

Total Promoter Shareholding 36.79% 36.79%

Total Public Shareholding 63.21% 63.21%

2.8. Further, the Acquirer Trust, vide the Application has relied on the following

grounds for exemption:

Exemption Order in the Matter of Subros Limited Page 5 of 11

a. The Settlor has set up the trust to inter alia provide a suitable succession

structure to ensure seamless intergenerational transfer of the Trust fund

amongst the beneficiaries, who are family members.

b. The Settlor intends to transfer and the Acquirer Trust proposes to acquire

entire shareholding of the Settlor in the Target Company.

c. To acquire shares in the Target Company and for being inserted as a

member of Promoter and Promoter group in the Target Company, the

Acquirer, being a Trust, requires specific exemption from the obligation to

make Open Offer under Regulation 4 of SEBI (SAST) Regulations, 2011

as—

i. the Acquirer Trust does not fall under the definition of ‘Promoter

group’ as defined under SEBI (ICDR) Regulations, 2018; and

ii. the Acquirer Trust does not qualify as ‘Qualifying Persons’ in terms

of the provisions of Regulation 10 of SEBI (SAST) Regulations, 2011.

d. Pursuant to the proposed acquisition, there would be no direct change in

the control and management of the Target Company.

e. The Acquirer Trust presently holds NIL shares in the Target Company.

f. The Acquirer Trust has declared that the proposed transaction is a non-

commercial transaction and will not prejudice the interest of public

shareholders of the Target Company.

g. The principle laid down in catena of cases by SEBI where exemption from

making open offer were granted in cases of acquisition by the same group

Exemption Order in the Matter of Subros Limited Page 6 of 11

– especially in case of Family Trusts, would also apply to the facts of the

present case.

2.9. Furthermore, vide the Application, the Acquirer Trust, has confirmed compliance

with the Guidelines outlined in the Schedule to the SEBI Circular dated December

22, 2017. In this regard, it has submitted that -

a. The Acquirer Trust is in substance, only a mirror image of the promoter’s

holdings and consequently, there is no change of ownership or control of

the shares or voting rights in the Target Company.

b. Only individual promoters or their immediate relatives or lineal descendants

are Trustees and beneficiaries of the Acquirer Trust.

c. The beneficial interests of the beneficiaries of the Acquirer Trusts have not

been and shall not in the future, be transferred, assigned or encumbered in

any manner including by way of pledge / mortgage.

d. In the event of dissolution of the Trust, the assets will be distributed only to

the beneficiaries of the trust or to their legal heirs.

e. The Trustees of the Trust will not be entitled to transfer or delegate any of

their powers to any person other than one or more of themselves.

f. Any change in the trustees / beneficiaries and any change in ownership or

control of shares or voting rights held by the Acquirer Trust shall be disclosed

within 2 days to the concerned stock exchanges with a copy endorsed to SEBI

for its record.

g. As far as the provisions of the SEBI Act, 1992 and the regulations framed

thereunder are concerned, the ownership or control of shares or voting rights

Exemption Order in the Matter of Subros Limited Page 7 of 11

will be treated as vesting not only with the Trustees but also indirectly with

the beneficiaries.

h. The liabilities and obligations of individual transferors under the SEBI Act,

1992 and the regulations framed thereunder will not change or get diluted

due to transfer to the Acquirer Trust.

i. The Acquirer Trust shall confirm, on an annual basis, that it is in compliance

with the exemption order passed by SEBI. The said confirmation shall be

furnished to the company which it shall disclose prominently as a note to the

shareholding pattern filed for the quarter ending March 31 each year, under

Regulation 31 of the SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015.

j. The Acquirer Trust shall get their compliance status certified from an

independent auditor annually and furnish the certificate to the Stock

Exchanges for public disclosure with a copy endorsed to SEBI for its records.

k. The proposed acquisition is in accordance with the provisions of the

Companies Act, 2013 and other applicable laws.

l. The transferor is disclosed as promoter of the Target Company in the

shareholding pattern filed with the Stock Exchanges for a period of more

than 3 years prior to the proposed acquisition.

m. There is no layering in terms of trustees / beneficiaries in case of the Acquirer

Trust.

Exemption Order in the Matter of Subros Limited Page 8 of 11

n. The Trust Deed does not contain any limitation of liability of the trustees /

beneficiaries in relation to the provisions of the SEBI Act, 1992 and all

regulations framed thereunder.

3. Consideration –

3.1. Before proceeding with the consideration of the Application and the prayer made

therein, I find it appropriate to place hereunder the relevant provisions of the

Takeover Regulations, 2011 for the facility of reference:

Acquisition of control:

4. Irrespective of acquisition or holding of shares or voting rights in a target company, no

acquirer shall acquire, directly or indirectly, control over 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.

3.2. I have considered the Application submitted by the Acquirer Trust and other

material available on record. Without reiterating the facts as stated above, the

following is noted:

a. The Application submitted is in respect of the proposed acquisitions of

shares and voting rights in the Target Company i.e. Subros Limited. The

proposed acquisition, as detailed above, to be made by the Acquirer Trust,

will attract the provisions of Regulation 4 of the Takeover Regulations,

2011.

b. Pursuant to the proposed acquisition, the Acquirer Trust would hold 2.48%

of the shares in the Target Company as currently being held by the transferor,

who is part of the promoters and promoter group of the Target Company.

Exemption Order in the Matter of Subros Limited Page 9 of 11

The total promoter shareholding in the Target Company would remain

unchanged at 36.79 %.

c. The proposed acquisition is intended to have a suitable succession

structure and promote welfare of Promoter Family. The proposed

acquisition would be non-commercial transactions which would not affect

or prejudice the interests of the public shareholders of the Target

Companies in any manner.

d. There will be no change in control of the Target Company pursuant to the

proposed acquisition, as stipulated under the SEBI Circular dated

December 22, 2017.

e. There will be no change in the total promoter shareholding of the Target

Company. There will also be no change in the public shareholding of the

Target Companies.

f. The Target Company shall continue to be in compliance with the Minimum

Public Shareholding requirements under the Securities Contracts

Regulation Rules, 1957 and the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015.

g. The Acquirer Trust has confirmed that it is in compliance with the

Guidelines outlined in the Schedule to the SEBI Circular dated December 22,

2017.

3.3. Considering the aforementioned, I am of the view that exemption as sought for

in the Application (read with further submissions) may be granted to the

Acquirer Trust, subject to certain conditions as ordered herein below.

Exemption Order in the Matter of Subros Limited Page 10 of 11

4. Order –

4.1. I, in exercise of the powers conferred upon me under Section 19 read with Section

11(1) and Section 11(2)(h) of the SEBI Act, 1992 and Regulation 11(5) of the

Takeover Regulations 2011, hereby grant exemption to the Proposed Acquirer,

viz. J.S. Family Trust from complying with the requirements of Regulation 4 of

the Takeover Regulations, 2011 with respect to the proposed direct acquisition in

the Target Company, viz. Subros Limited, by way of the proposed acquisition as

mentioned in the Application.

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

a. The proposed acquisitions shall be in accordance with the relevant

provisions of the Companies Act, 2013 and other applicable laws.

b. On completion of the proposed acquisition, the Proposed Acquirer shall

file a report with SEBI within a period of 21 days from the date of such

acquisition, as provided in the Takeover Regulations 2011.

c. The statements / averments made or facts and figures mentioned in the

Application and other submissions by the Proposed Acquirer are true and

correct.

d. The Proposed Acquirer shall ensure compliance with the statements,

disclosures and undertakings made in the Application. The Proposed

Acquirer shall also ensure compliance with the provisions of the SEBI

Circular dated December 22, 2017.

Exemption Order in the Matter of Subros Limited Page 11 of 11

e. The Proposed Acquirer shall also ensure that the covenants in the Trust

Deeds are not contrary to the above conditions and undertaking provided

by the transferor. In such case, the Trust Deed shall be suitably modified

and expeditiously reported to SEBI.

4.3. The exemption granted above is limited to the requirements of making open offer

under the Takeover Regulations, 2011 and shall not be construed as exemption

from the disclosure requirements under Chapter V of the aforesaid Regulations;

compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015,

Listing Agreement / SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 or any other applicable Acts, Rules and Regulations.

4.4. The Application dated April 27, 2021 read with other submissions filed by J S

Family Trust, is accordingly disposed of.

-Sd-

Place: Mumbai S.K. MOHANTY

Date: January 12, 2022 WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA