SEBI Exempts Succession Transfer in Waaree Energies: Family Trust Acquires Stake Without Mandatory Open Offer

SEBI Exempts Succession Transfer in Waaree Energies: Family Trust Acquires Stake Without Mandatory Open Offer​

Regulator Clears Internal Succession Plan for Waaree Energies​

Securities and Exchange Board of India (SEBI) has granted a significant exemption to the proposed transfer of promoter shareholding in Waaree Energies Limited. The regulator ruled that the transaction, which sees a family trust acquire substantial shares, is purely an internal succession arrangement. SEBI determined that this move does not alter control or prejudice public shareholders, thereby waiving the mandatory open offer requirement under existing regulations.

The exemption allows the CT Doshi Family Trust to acquire a 44.88 percent direct stake in Waaree. This acquisition happens from promoter Chimanlal Tribhuvandas Doshi. Furthermore, the trust will indirectly gain an additional 18.34 percent stake through acquiring nearly 100 percent of Waaree Sustainable Finance Pvt. Ltd.

Navigating Takeover Code Regulations​

The proposed transaction would typically trigger regulations 3, 4, and 5 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. These rules mandate an open offer when an acquirer crosses 25 percent voting rights. Regulation 4 requires an open offer if control is acquired, while Regulation 5 applies to indirect acquisitions through a holding company or trust.

However, SEBI assessed the transfer as a non-commercial internal reorganisation. The regulator emphasized that this move was undertaken solely for succession planning and governance within the promoter family structure.

Promoter Holdings Remain Stable Post-Transfer​

Despite the scale of the planned acquisition, the regulator confirmed key aspects regarding shareholder status. The overall promoter holding in Waaree Energies will remain unchanged at 64.22 percent after the transfer is complete. Public shareholding is projected to stand steady at 35.78 percent.

SEBI found that there will be no change in the management or control of the company. Beneficial ownership will continue residing within the promoter family, with the trust's beneficiaries including the settlor's children, their spouses, and lineal descendants.

Addressing Regulatory Hurdles and Panel Recommendations​

Strict compliance with SEBI's master circular typically requires a transferor to have been disclosed as a promoter in stock exchange filings for at least three years before such a trust transfer. A complication arose as Waaree was listed only on October 28, 2024, making strict adherence to the pre-listing disclosure timeline impossible.

Despite this timing difficulty, the Takeover Panel recommended granting the exemption. This recommendation factored in that the promoter had been identified in the company's draft red herring prospectuses filed in 2021 and 2023, well before listing. The panel also took into account Chimanlal Doshi's age, deeming the transaction essential for succession planning.

SEBI Backs 'In Substance' Fulfillment of Disclosure​

Agreeing with the Takeover Panel’s findings, SEBI stated that the three-year disclosure requirement had been satisfied "in substance." This interpretation is supported by a reference to an earlier exemption order issued in the MPS Limited matter.

A ruling by SEBI Whole-Time Member Kamlesh Chandra Varshney reinforced this stance. The member noted agreement with the panel’s rationale, confirming that there would be no ultimate change in control of the Target Company. He added that nothing apparent in the application would prejudice the interest of public shareholders, thus finding the condition fulfilled "in substance."

Future Compliance Timeline and Requirements​

The granted exemption is valid for one year from the date of the order. The family trust must complete the acquisition within this stipulated period. Upon completion, the trust must file a post-acquisition report with SEBI within 21 days. Furthermore, the entity must continue to comply with all applicable disclosure and regulatory requirements as prescribed by the board.