TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1887
X X X X Extracts X X X X
X X X X Extracts X X X X
....plication dated March 30, 2025 (hereinafter referred to as "Application") seeking exemption from the applicability of Regulation 3(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as "Takeover Regulations, 2011") in the matter of proposed direct acquisition of shares in the Target Company was received by SEBI from Department of Investment and Public Asset Management ("DIPAM"), Ministry of Finance, Government of India ("GOI") (hereinafter referred to as "Acquirer / Applicant"). 3. The submissions made by the Applicant in the Application are as under: (a) The issued, subscribed and paid up Equity Share Capital of the Target Company is Rs. 7,13,93,03,50,010/- divided into 71,39,30,3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epresented by DIPAM). (d) The GOI permitted TSPs to pay the due instalments by way of equity, before/after expiry of the moratorium/deferment period, consequent to a review of the prevailing situation, at the option of the GOI, as communicated by the DoT vide its Letter No. 1002/05/2024-LFP dated March 28, 2025. (e) The Target Company has vide Letters dated March 18, 2025, March 21, 2025, and March 28, 2025, expressed its inability to make payments towards Government dues which may also lead to GOI's current equity stake to be totally wiped out, and has therefore, submitted a proposal to the DoT requesting for further Government support by seeking approval for conversion of outstanding spectrum auction dues (including deferred dues) rep....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... would result in the cumulative shareholding of GOI in the Target Company exceeding twenty-five percent (25%) and consequently, in accordance with the provisions of the Takeover Regulations, 2011, shall require an open offer to be made to the public to acquire shares in the Target Company, in terms of the provisions of Regulation 3(1) of the Takeover Regulations, 2011. Grounds for Seeking Exemption 4. The Applicant has sought exemption vide the Application on the following grounds: (a) An open offer shall require additional investment for the acquisition of further equity shares by the GOI. Such a requirement renders the conversion of the outstanding dues to equity untenable as the purpose of this conversion shall be defeated, having a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance of equity shares by VIL to GOI shall amount to conversion of dues payable by VIL to GOI which shall be akin to conversion of debt into equity between a debtor and a creditor. (e) The Target Company, being a large listed company with numerous investors who have invested in the Target Company, is now facing a dire financial crunch which poses a significant risk to such investors. The Government of India shall, through conversion of these dues into equity shares, provide crucial support to the Target Company, significantly improving the Target Company's financial health which shall consequently result in protection of the interests of investors and the security market. (f) SEBI has vide order dated May 25, 2022, previously granted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....option of the GOI, as communicated by the DoT vide its Letter No. 1002/05/2024-LFP dated March 28, 2025. (b) VIL has opted for the conversion of outstanding spectrum auction dues (including deferred dues) repayable after expiry of the moratorium period, for an amount equal to Rs. 36950,00,00,000/- (Rupees Thirty Six Thousand Nine Hundred and Fifty Crore Only) into equity shares. The equity shares shall be issued to GOI on preferential basis through issuance of an order under Section 62(4) of the Companies Act, 2013. (c) Pursuant to the above transaction, the shareholding of GOI in VIL shall increase from 22.60% to 48.99%. Such increase in shareholding of the GOI would trigger an open offer obligation under Regulation 3(1) of Takeover Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ake an open offer. In my view, it shall be appropriate to treat the conversion of VIL's Outstanding Spectrum Auction Dues (including deferred dues) repayable after the expiry of the moratorium period, into equity shares to be issued to GOI, at par with a debt restructuring scheme as envisaged under Regulation 10(1)(i) of Takeover Regulations, 2011. (f) In view of the special circumstances of this matter, public policy and public interest involved in the entire transaction and taking into cognizance various steps taken by GOI to ease liquidity and cash flow to the TSPs as well as to help various banks having substantial exposure to the Telecom sector, I note that the proposed acquisition of shares by GOI merits consideration. Considering t....