SEBI Vs. ING BANK N V
LAWS(SB)-2003-2-6
SECURITIES APPELLATE TRIBUNAL
Decided on February 28,2003

Appellant
VERSUS
Respondents

JUDGEMENT

G.N.Bajpai, - (1.) ING Bank N V (hereinafter referred to as ' the Acquirer') indirectly through BBL Mauritius Investments Ltd (hereinafter referred to as 'BBLMI'-a wholly owned subsidiary) holds 9.79% shares of the Vysya Bank Ltd (hereinafter referred to as the 'Target company') and through BBL Mauritius Holdings Ltd (hereinafter referred to as "BBLMH' a wholly owned subsidiary) holds 34.20% shares of the Target company . 1.1 The shares of the Target company are listed at Bombay Stock Exchange, National Stock Exchange, Bangalore Stock Exchange, Hyderabad Stock Exchange and Chennai Stock Exchange.
(2.) The Acquirer made an application dated December 20, 2002, under subregulation (2) of regulation 4 of the Regulations SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as "the Regulations") to the Securities and Exchange Board of India (hereinafter referred to as "SEBI") seeking exemption from compliance of the provisions of Chapter III of the Regulations. 3 In the aforesaid application, the Acquirer, inter-alia, submitted the following: He ING Group is a global financial institution of Dutch origin. THe ING Group, which comprises a conglomerate of companies, offers banking, insurance and asset management services in approx. 65 countries around tHe world. ING Groep N.V. is tHe ultimate holding company of tHe ING Group. 3.2 ING Groep N.V. presently has beneficial interest in 43.99% of tHe issued equity share capital of tHe Target company through tHe instrumentality of four ING Group companies viz. (a) Acquirer - a wholly owned subsidiary of ING Groep N V. (b) Banque Bruxelles Lambert S A (BBL) - a wholly owned subsidiary of tHe Acquirer. (c) BBLMH - a wholly owned subsidiary of BBL, and (d) BBLMI - a wholly owned subsidiary of BBLMH. THe diagrammatic representation of tHe present 43.99% shareholding of tHe ING Group in tHe Target company is as given below : Groep N.V | | 100% ING Bank N.V.(Acquirer) | | 99% Banque Bruxelles Lambert S.A (BBL) | | 100% BBL Mauritius Holding (BBBMH) | | 100% BBL Mauritius Investments (BBBMI) | | 9.79% 34.20% THe Vysya Bank Ltd(Target ompany) 3.3 THe registered shareholders of tHe Target company in respect of tHe aforesaid 43.99% shareholding of tHe ING Group are BBLMH and BBLMI respectively. 3.4 BBLMH presently holds 77,49,701 shares constituting 34.20% of tHe issued equity share capital of tHe Target company and BBLMI presently holds 22, 18,419 shares constituting 9.79% of tHe issued equity share capital of tHe Target company. 3.5 As part of an internal restructuring within tHe ING Group in furtHerance of requirements of tHe Belgian regulatory authorities, it is proposed to restructure tHe shareholding pattern of tHe ING Group in tHe Target company such that BBLMH is Held directly by tHe Acquirer. For this purpose, it is proposed that BBL will transfer its entire shareholding of BBLMH to tHe Acquirer. THe diagrammatic representation of tHe 43.99% shareholding of tHe ING Group in tHe Target company post tHe internal restructuring will be as follows : Verdana ING Groep N. V. | 100% ING Bank N.V. (Acquirer) | 100% BBL Mauritius Holdings(BBLMH) | 100% BBL Mauritius Investments(BBLMI) | 9.79% 34.20% | THe Vysya Bank Ltd(Target company) 3.6 It is apparent from tHe aforesaid that notwithstanding tHe proposed acquisition by tHe Acquirer of tHe entire paid up share capital of BBLMH (which in turn directly and through its subsidiary BBLMI, holds shares in tHe Target company being a listed Indian company): a) THe ING Group will continue to be tHe ultimate beneficial shareholder of tHe entire aforesaid 43.99% shareholding in tHe Target company and tHere will be no change in tHe percentage of shareholding of tHe ING Group in tHe Target company and b) BBLMH shall continue to be tHe registered and beneficial shareholder of 34.20% of tHe paid up equity share capital of tHe Target company and BBLMI shall continue to be tHe registered and beneficial shareholder of 9.79% of tHe paid up equity share capital of tHe Target company. 3.7 THe proposed acquisition does not involve any change whatsoever in tHe ultimate beneficial ownership of tHe shares of tHe target company Held by tHe ING Group. 3.8 THe proposed acquisition only involves an ING intra-group transfer of tHe shares of an ING Group Company (viz. tHe Acquirer) - without effecting any change whatsoever in tHe shareholding, control or management of tHe Target company. 3.9 THe Acquirer already indirectly holds tHe entire shareholding of BBLMH, since BBL is itself a wholly-owned subsidiary of tHe Acquirer. 3.10 THe proposed transfer will not in any manner prejudicially affect tHe shareholders of tHe Target company. 3.1He ING Group also intends to purchase (through tHe instrumentally of its group companies) an additional 5% of tHe issued equity share capital of tHe Target company, eitHer through market operations or by private negotiations, so as to increase its shareholding to 49% of tHe issued equity share capital of tHe Target company, being tHe present permissible limit for Foreign Direct Investment in banking companies in India. 3.12 THerefore, tHe provisions of tHe Regulations are not applicable to tHe proposed transfer of tHe shares of BBLMH by BBL to tHe Acquirer.
(3.) THE above said application for exemption dated December 20, 2002 was forwarded to the Takeover Panel on in terms of sub-regulation(4) of regulation 4 of the Regulations. THE Takeover Panel vide its report dated September 14, 2002 has recommended, inter alia, as under: "Since, as per the averments made in the application, ING Bank intends to acquire from BBL its entire shareholding of BBL Holdings, there seems to be no intended acquisition of equity share capital of the target company. In Panel's view, the application, in circumstances, does not fall within the ambit or scope of Takeover Code necessitating grant of exemption as sought and hence, no recommendation for grant of exemption is made by the Panel .";


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