Mumbai: The Securities and Exchange Board of India (Sebi) has exempted acquisition of shares of group companies by the Thapar brothers in the course of the restructuring of the Thapar group from the open-offer clause of the takeover code.

Under Sebi takeover Regulations 3(1) (1), acquisition of over 15 per cent of shares in a company would require the acquirer to make an open offer for a minimum of 20 per cent of the public holding of the company.

The application for exemption to Sebi follows a family settlement last year among four brothers - Inder Mohan Thapar, Brij Mohan Thapar, Lalit Mohan Thapar and Madan Mohan Thapar, all sons of late Lala Karam Chand Thapar - to reorganise the businesses under the group between themselves, both in terms of ownership and management.

The exemption is granted to eight listed companies of the group - Greaves Ltd, JCT Electronics Ltd, English India Clays Ltd, JCT Ltd, Crompton Greaves Ltd, Ballarpur Industries Ltd, Bharat Starch Ltd and Water Base Ltd.

The Thapar group in its application to Sebi said that a family settlement agreement (FSA) would be entered into among the Thapar brothers-controlled 100 companies and therein the companies would be divided among four different groups.

It said Sebi has granted exemption to the acquirers in regard to the proposed acquisition of the voting rights of the target companies in terms of an FSA. Sebi has also directed the group to complete the acquisition of shares within 30 days of the order and to file a report with the market regulator.

A Thapar group official said the reorganisation is aimed at setting a future direction by segregating and clarifying interests as part of the succession planning, maximising shareholder value through greater clarity leading to improved accountability, elimination and avoidance of cross-holdings and for ensuring better focus between ownership, management and control.

With this Sebi nod, further steps for implementing the family arrangement like transfer of shares, reconstitution of boards of the companies, recognition by the Company Law Board and consolidation of group holdings through merger of investment companies will have to be undertaken. The reconstruction will be done under Section 391,394 of the Companies Act, Sebi sources said.

As per the family arrangement, the IM Thapar Group is to get, among others companies, KCT Coal Sales, Waterbase, India City Properties. Brij Mohan Thapar will get, among other companies, Bilt Chemical, English Indian Clays, Bharat Starch Industries and Crompton Greaves. BILT and APR Ltd, besides other companies, will come under the fold of L M Thapar. JCT Ltd, Greaves Ltd and JCT Electronics Ltd, besides other companies, will come under the control of M M Thapar.

The sources said the family settlement required each of the four brothers to buy the others stake so as to conform to the new holding arrangements. As the purchase of holdings was bound to trigger the takeover code, it was decided to seek the approval of Sebi for exempting the family arrangement from some of the provisions of the takeover code.

Last year, the Thapar group had announced a restructuring of its group businesses into four groups, to be headed by members of the four sons of the late Lala Karam Chand Thapar. Both the ownership and management of the group companies were to be reorganised between the four brothers.

According to the plan, the descendants of Inder Mohan Thapar, the elder brother of Lala Karam Chand Thapar, the founder of the Thapar group, would have the control over KCT Coal Sales, Waterbase and India City Properties.

The Brij Mohan Thapar group would get to control BILT Chemicals, English Indian Clays, Bharat Starch Industries and Crompton Greaves. The Lalit Mohan Thapar group would control Ballarpur Industries and AP Rayon. The Manmohan Thapar group was slated to manage JCT with interests in cotton textiles and liquor, Greaves (Engineering) and JCT Electronics.