MUMBAI, Aug 25: SEBI has exempted the promoters of Malwa Cotton Spinning Mills from making a public offer for 20 per cent of the equity capital while increasing their stake in the company to 54.8 per cent from 48 per cent.

Under the new takeover regulations, effective February 20, 1997, promoters holding more than 10 per cent equity in their company and desirous of increasing their stake are expected to make a public offer for a minimum of 20 per cent of the company's equity capital. The company in its application, to SEBI said there was no change in the management, board of directors or control of the company.

Malwa Cotton sought exemption under chapter III of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. The exemption has been granted under the provisions of section 4(3) of the said regulations.However, while granting the exemption, SEBI had asked for the verification of the names of persons submitted as promoters with the list of promoters submitted earlier and included as part of promoters' group while the disclosures were made under the resolution 6.

In order to increase their stake in the company, the promoters of the company intended to issue 7,35,000 warrants on a preferential basis to themselves at a price of Rs 90 per warrant. It had already taken the shareholders permission at the company's AGM held on February 3, 1997.

The SEBI exemption order issued on July 17 maintained that `from the facts stated, it appears that there would be no change in the management, the board of directors or control of the company as a result of the proposed issue.

The exemption has also been granted because some of the disclosure requirements specified under the new takeover code could not be included in the notice convening the EGM for the resolution as it was passed before the new takeover code came into existence. The new takeover code was passed on February 20, 1997, while the resolution was passed at the EGM held on February 3, 1997.

The resolution belonged to a `transitional' period, the report said, adding that since the EGM for the allotment of the warrants was held just before the notification of the new regulations, it would not have been possible for the company to envisage certain disclosures which have been mentioned in the new regulations and therefore these have not been made in the notice convening the said EGM.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.