The Securities and Exchange Board of India (SEBI) issued an order[1] on July 25, 2025, granting exemption to Ms. Janky Rupen Patel from complying with certain Takeover Regulations related to her proposed indirect acquisition of shares in Patel Engineering Limited, a listed company.
Background
Patel Engineering Limited, incorporated in 1949 and listed on both BSE and NSE, has an issued equity capital of approximately INR 84.44 crore shares. The promoter group holds 36.11% of the paid-up share capital, public shareholders hold 59.50%, and 4.39% is held by Non-Promoter Non-Public (Employee Trust).
The proposed acquirer, Ms. Janky Rupen Patel, belongs to the promoter group. The need for exemption arose because the acquisition involves an indirect transfer of shares and voting rights through entities forming part of the promoter group.
Facts of the Case
- Mr. Rupen Pravin Patel, a promoter, passed away on July 5, 2024. His rights in key promoter entities—Praham India LLP (PI LLP) and Raahitya Construction Private Limited (RCPL)—were transmitted to family members, including Ms. Janky Rupen Patel (his spouse) and his children Ms. Alina Rupen Patel and Mr. Ryan Rupen Patel.
- Ms. Alina Rupen Patel and Mr. Ryan Rupen Patel proposed to transfer 99.98% of their rights in PI LLP to their mother, Ms. Janky Rupen Patel, by way of a gift. This transfer would increase Ms. Janky’s influence over RCPL and thereby give her indirect rights over 32.28% of the target company’s shares.
- There is no direct acquisition of shares of Patel Engineering Limited in this transaction. The shareholding pattern of the company and the promoter group remains unchanged before and after the proposed transaction.
- The transaction is between immediate relatives: mother and children, falling under the definition of “immediate relatives” as per SEBI regulations.
- The transfer would not cause any change in control of the target company, nor would it prejudice public shareholders.
SEBI’s Consideration
- The proposed indirect acquisition triggers provisions under Regulation 3(1) and Regulation 5(1) of the SEBI Substantial Acquisition of Shares and Takeovers (Takeover Regulations), 2011, which generally require a public open offer when shareholding crosses a threshold.
- However, SEBI guidance recognizes that automatic exemption available for direct acquisitions between immediate relatives is not automatically extended to indirect acquisitions.
- SEBI’s Takeover Panel reviewed the matter, noting no change in control and no harm to public shareholder interests since the acquirer was already part of the promoter group.
- The Panel recommended granting exemption given the familial nature of the transfer and absence of adverse impact.
Order and Conditions
Under the powers conferred by the SEBI Act and Takeover Regulations, SEBI granted exemption to Ms. Janky Rupen Patel from complying with open offer requirements under Regulation 3(1) and Regulation 5(1) for this proposed indirect acquisition.
Key conditions include:
- The acquisition must comply with the Companies Act, 2013, and other applicable laws.
- Ms. Janky Patel must file a report with SEBI within 21 days of the acquisition.
- Statements and facts in the application must be true and accurate.
- Compliance with all other applicable SEBI regulations relating to disclosures, insider trading, and listing obligations must continue.
- The exemption is valid for one year from the date of the order and will lapse if the acquisition is not completed within that period.
Conclusion
SEBI’s order exemplifies its balanced approach in takeover regulations where familial or intra-promoter transactions occur without changing control or harming public investor interests. By granting exemption subject to conditions, SEBI facilitates orderly succession planning and restructuring within promoter groups while safeguarding regulatory compliance and market integrity.
For detailed discussion, please feel free to contact devadhaantu@devadhaantu.in
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[1] SEBI Order No. WTM/KV/CFD/01/2025-26
