Promoters daughters are immediate relatives and part of promoter group irrespective of marriage or living a separate life or no involvement in management – SEBI
SEBI replying to a informal guidance has stated that by virtue of the definition of ‘promoter group’ under SEBI (LODR) Regulations, 2015 (SEBI LODR Regulations), the daughters of the promoters are immediate relatives and are a part of the promoter group irrespective of the fact that they are married and living a separate life or that they do not have any involvement in the management of the Company.
It was also stated that by virtue of Regulation 31A (6) of SEBI LODR Regulations, in case of gift of shares held by a promoter/ person belonging to the promoter group, immediately on such event, the recipient of such shares shall be classified as a promoter/ person belonging to the promoter group, as applicable.
Further, the conditions for re-classification of promoter group to public and the procedure thereof are specified under regulation 31A of the SEBI LODR Regulations. Regulation 31A(3)(b)(i) specifies that promoter(s) seeking re-classification and persons related to the promoter(s) seeking re-classification shall not together hold more than 10% of the total voting rights in the listed entity.
In the instant case, the Chairman of the company wanted to gift some of his shares to two of his married daughters who were living independent lives and did not have any part or involvement in the management of the company. The daughters were not holding any shares of the Company and as such their name did not form part of the Promoter & Promoter Group category as per shareholding pattern filed by the Company with Stock exchanges under Regulation 31 of SEBI LODR Regulations.
However, the daughters desired that their names to be reclassified from the ‘Promoter & Promoter group’ category to ‘Public category ‘ as they did not have any Involvement in the management of the Company and were married and living separate lives and that they desired not to be bound by the restriction of trading window applicable on the ‘Promoter & Promoter group’.
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