Nova Industries Ltd. ('Nova') is an Indian company engaged in the business of manufacturing of Automotive Equipments. The equity shares of the 'Nova' are listed on NSE. Star Investment Ventures Ltd. ('Star') owns 16% sta

CS Executive · Securities Laws and Capital Markets · PYQS · December 2020
Nova Industries Ltd. ('Nova') is an Indian company engaged in the business of manufacturing of Automotive Equipments. The equity shares of the 'Nova' are listed on NSE. Star Investment Ventures Ltd. ('Star') owns 16% stake in the Nova. Moon Investment Company Pvt. Ltd. ('Moon') owns 14% stake in the Nova. Star and Moon have also been classified as promoters of the Nova in its shareholding pattern for over 5 years. As decided by the management of Star and Moon, it is proposed that Moon will be absorbed by Star through a scheme of arrangement, pursuant to which Star's shareholding in the Nova will increase from 16% to 30% as the shares held by Moon will be transferred to Star and vested in Star and their shareholders will become shareholders of Star. The entire consideration for the amalgamation would be discharged by Star by the issue of its shares. The scheme is likely to be completed and approved by the National Company Law Tribunal sometime during the financial year 2019-2020. (i) Explain the provisions and conditions given under regulation 10(1)(d)(iii) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 for availing the exemption.

Answer & Explanation:

Regulation 10(1)(d)(iii) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the acquisition of shares of the Target company pursuant to a scheme of arrangement sanctioned by the National Company Law Tribunal provides an exemption to an acquirer from making an open offer subject to the following conditions: The consideration paid in terms of cash and cash equivalents is less than 25% of the consideration paid under the scheme; and Post implementation of the scheme, the persons holding at least 33% of voting rights in the combined entity are the same as the persons who held the entire voting rights before the implementation of the scheme.

Topics: Takeovers

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