SEBI Exempts DKJ Ownership Trust from Open Offer for 19.85 Percent Stake in S Chand

The Securities and Exchange Board of India (SEBI) has granted an exemption to DKJ Ownership Trust from making a mandatory open offer to public shareholders in connection with its proposed acquisition of a 19.85% equity stake in educational content and publishing firm S Chand and Company Limited.

The order, passed by SEBI Whole Time Member Kamlesh Chandra Varshney, exempts the trust from complying with the open offer requirements outlined under Regulation 3(1) and Regulation 4 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations).

Details of the Transaction

Under the proposed direct acquisition, DKJ Ownership Trust will acquire 70 lakh equity shares—representing a 19.85% equity stake—from promoter Neerja Jhunjhnuwala, who currently holds a 22.68% stake in the target company.

The trust structure involves Dinesh Kumar Jhunjhnuwala and Neerja Jhunjhnuwala as trustees, with family members and lineal descendants as beneficiaries.

Key aspects of the ownership restructuring include:

• The transaction is being executed pursuant to an internal private family arrangement aimed at streamlining promoter group shareholding and facilitating smooth succession planning.
• Following the transfer, the collective promoter and promoter group shareholding in S Chand and Company Limited will remain unchanged at 46.99%.
• Control and voting rights will remain intact within the same promoter group, with no induction of outside entities or third-party beneficiaries.
• Public shareholding in the company will remain completely unaffected.

Regulatory Rationale and Conditions

In its ruling, the market regulator noted that the proposed acquisition is in the nature of a non-commercial family arrangement and will not prejudice the interests of minority and public shareholders in any manner.

However, SEBI has imposed strict compliance conditions on the exemption:

Compliance Requirements:

• The proposed direct acquisition must be completed within a period of one year from the date of the order, failing which the exemption will lapse.
• The acquirer trust must file a compliance report with SEBI within 21 days of completing the acquisition.
• The exemption applies strictly to the open offer obligations under SAST Regulations and does not exempt the parties from disclosure requirements under Chapter V of the takeover regulations, insider trading rules under SEBI (Prohibition of Insider Trading) Regulations, or listing compliances under SEBI (LODR) Regulations.

This order reinforces SEBI's long-standing regulatory approach of facilitating succession planning and intra-promoter restructuring through family trusts, provided that such arrangements mirror existing ownership and do not result in a backdoor change of management control.

Tags: S Chand and Company SEBI Publishing Sector BSE NSE SAST Regulations