SEBI Approves Exemption for Paisalo Digital Promoter Trusts

The Securities and Exchange Board of India (SEBI) has granted an open offer exemption to two private family trusts of the promoters of Paisalo Digital Ltd, allowing them to acquire shares and voting rights in the company as part of an internal family reorganisation.

According to SEBI’s order issued on Friday, the exemption has been approved for Suneeti Dolaa Private Trust and Sulabhya Paramita Private Trust. The acquisition will proceed without triggering the open offer requirements under the Takeover Regulations.

Paisalo Digital is listed on both BSE and NSE.

Objective: Streamlining Succession and Family Structure

The regulator clarified that the proposed acquisitions are part of succession planning within the promoter family, involving gift transfers of shares held by Sunil Agarwal, Suneeti Agarwal, and Santanu Agarwal. The reorganisation also includes indirect transfers of shares held through promoter group private entities.

SEBI stated that the trust reorganisation will not result in:

• Any change in control of the company

• Any change in the aggregate promoter group shareholding in Paisalo Digital

• Any alteration in public shareholding

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Non-Commercial and Compliant with SEBI Norms

In his order, SEBI Whole-Time Member Kamlesh Chandra Varshney emphasized that the proposed acquisitions are non-commercial and purely for internal reorganisation purposes.

“The proposed acquisitions are in furtherance to an internal reorganization within the Promoter Family and are intended to streamline succession and promote the welfare of the Promoter Family,” Varshney noted.

He further added that these transactions would not affect or prejudice the interests of public shareholders in any manner.

Trusts Meet SEBI’s 2023 Circular Conditions

SEBI recorded that both trusts have complied with the conditions set out in the regulator’s February 2023 circular regarding private trust structures used for promoter succession.
This includes:

• Mirror shareholding by trusts

• Beneficiaries and trustees are limited to promoter family members only

Legal Provisions and Validity Period

The SEBI order specifies that:

• The proposed acquisitions shall comply with the Companies Act and all other applicable laws.

• The Trust Deeds must not contradict the conditions of SEBI’s order. If needed, they must be modified and reported to SEBI promptly.

• The exemption remains valid for one year, within which the transfers must be completed.

• The trusts are required to file a report with SEBI within 21 days of completing the share transfers.

Disclosure and Compliance Obligations Remain Intact

While SEBI has granted the exemption, it also cautioned that the relief does not waive or dilute any ongoing obligations under:

• Disclosure requirements

• Insider trading regulations

• Listing Obligations and Disclosure Requirements (LODR)

• Any other applicable laws

Conclusion

With this exemption, SEBI has allowed Paisalo Digital’s promoter family to carry out its succession and internal reorganisation process efficiently, while ensuring no impact on public shareholders and maintaining regulatory compliance.