Sebi open offer exemption granted for Muthoot Microfin promoter family trusts restructuring

Sebi has allowed six promoter family trusts of Muthoot Microfin Ltd to avoid making an open offer. The clearance relates to a planned internal restructuring that triggers an indirect share acquisition. The capital markets regulator said the move fits within permitted exceptions under takeover rules. The order was issued on Tuesday and set out conditions for the exemption.

Representative image

The exempted entities are Thomas John Muthoot MF Trust, Thomas George Muthoot MF Trust, Thomas Muthoot MF Trust, Preethi John Muthoot MF Trust, Nina George MF Trust and Remmy Thomas MF Trust. Sebi said these trusts would otherwise face open offer obligations. The matter falls under the SAST Substantial Acquisition of Shares and Takeovers framework.

Sebi open offer exemption for Muthoot Microfin under SAST rules

"I, hereby grant exemption to the proposed acquirers, from complying with the SAST Regulations, 2011, with respect to the proposed direct acquisition in the target company, viz., Muthoot Microfin Ltd, by way of the proposed transaction, Sebis Whole Time Member Kamlesh Chandra Varshney said in the order.\"

Sebi explained that the proposal involves an indirect purchase of a 50.21 per cent stake. This holding in Muthoot Microfin is currently with Muthoot Fincorp Ltd (MFL). The structure changes because the acquirers plan to take 99.56 per cent shareholding and control in MFL. This step results in indirect control over the shares held by MFL.

Muthoot Microfin restructuring and Sebi open offer exemption details

The regulator described the deal as an internal reorganisation within the promoter family. Sebi said it is meant to streamline succession and support the welfare of Muthoot Family members. The steps include share transfers among promoters and gifting shares to spouses. After that, the relevant family trusts would be transferred under the proposed structure.

Sebi said the plan does not change control or management at Muthoot Microfin. Sebi noted that trustees and beneficiaries are promoters and immediate family members. The order also said the transaction is non-commercial in nature. Sebi added it would not harm public shareholders of the target company.

Sebi open offer exemption conditions for Muthoot Microfin acquirers

Under SAST rules, large share purchases or control shifts usually require an open offer. Sebi said exemptions may apply to inter se transfers among promoters and similar internal changes. For this case, Sebi required a report to be filed within 21 days from acquisition. Sebi also said other regulatory duties still apply.

Sebi said the open offer exemption stays valid for one year from the order date. Sebi added the acquirers must finish the acquisition within that period. If the timeline is missed, the exemption will lapse and cease to exist. The order limited relief only to open offer requirements under the takeover rules.

With inputs from PTI