Sebi exempts two family trusts from making open offer to Vadilal Industries' shareholders

Markets regulator Sebi on Wednesday exempted two family trusts from making open offer to the shareholders of Vadilal Industries following acquisition of shares in the company.

IVG Family Trust and Shree Devarsh Trust are the trusts exempted from making open offer, the Securities and Exchange Board of India (Sebi) said in two separate orders.

The orders come after the entities sought exemption from applicability of SAST (Substantial Acquisition of Shares and Takeovers) Regulations in the matter of proposed acquisition of shares and voting rights in Vadilal Industries.

With regard to Shree Devarsh Trust matter, the proposed transaction involves transfer of 5.63 per cent equity shares from Devanshu Laxmanbhai Gandhi, Devalben Devanshu Gandhi and Laxmanbhai R Gandhi HUF to Shree Devarsh Trust.

The transaction will result in a direct acquisition of shares by the trust in Vadilal Industries.

In addition to the direct acquisition, the trust will acquire shares in the promoter companies (which are owned and controlled by the promoter family), resulting in an indirect acquisition of shares/control in the company.

It has been proposed to transfer the shares of existing shareholders in Vadilal International, Vadilal Finance Company and Veronica Constructions to the trust.

Pursuant to the proposed acquisitions, Shree Devarsh Trust will directly hold an aggregate of 5.63 per cent stake in the company.

In the case of IVG Family Trust, the proposed acquisition involves transfer of 5.59 per cent stake from Virendra Ramchandra Gandhi, Virendra R. Gandhi HUF, Ilaben Virendra Gandhi and Janmajay Virendra Gandhi to IVG Family Trust.

Further, it has been proposed to transfer the shares of existing shareholders in Vadilal International, Vadilal Finance Company and Veronica Constructions to the trust.

Following the proposed transaction, IVG Family Trust will directly own 5.59 per cent stake in the company.

The proposed acquisitions by these trusts will trigger open offer under the Takeover Regulation.

The trusts sought exemption from Sebi saying the proposed transfer of shares is only in the nature of interse transfer of shares within the promoter group.

Further, they said the proposed acquisition is intended to streamline succession and welfare of the members of the company's promoter group.

Sebi granted exemption to both trusts from making open offer to the shareholders of Vadilal Industries as there will be no change in control of the company pursuant to the proposed acquisition of shares.

"The preacquisition and postacquisition shareholding of the promoters in the target company (Vadilal Industries) will remain the same. There will also be no change in the public shareholding of the target company," Sebi said.