Background & Circumstances
CHL Limited is a listed company on BSE since 2008. The promoter and promoter group hold approx. 72.84%, while public shareholders hold 27.16%. The Company has proposed to issue CCDs/CCPS on preferential basis, with subsequentconversion into equity sharesin FY 2026–27.
Proposed allottees include:
- Promoters (Mr. Luv, Mr. Gagan, and Mr. Lokesh Malhotra)
- Foreign Investor Entity 1 (FIE-1) (wholly owned by Mr. Lokesh Malhotra)
- Public investors: Domestic and Foreign Investor Entity 2 (FIE-2)
Promoter or promoter group shareholding, post conversion of all CCPS / CCDs in FY 2026-27 issued to promoter/promoter group and public, decrease by 0.96%. Public category shareholder FIE-2 will hold 10.89% and Domestic Investor Entity will hold 5.45% pursuant to the conversion. Further as per the terms of the issue of CCPS/ CCDs, board size will increase from 6 to 14, with right to appoint nominee director to both FIE-1 (3 directors + 1 observer) and FIE-2 (1 director + 1 observer).
Calculation of percentage change:
| Particulars | Pre-Issue | Proposed issue | Post-issue | |||
| Number of Equity shares | Pre-conversion shareholding | No of CCPS and/or CCD to be allotted | Number of Equity shares (After conversion) | Post-conversion shareholding | % change in shareholding in FY 2026-27 | |
| Promoter or Promoter Group | 3,99,30,049 | 72.84% | 5,09,36,123 | 9,08,66,172 | 71.89% | -0.96% |
| Public shareholders | 1,48,88,241 | 27.16% | 2,06,49,780 | 3,55,38,021 | 28.11% | +0.96% |
| Total (Promoter + Public) | 5,48,18,290 | 100% | 7,15,85,903 | 12,64,04,193 | 100% | – |
- Queries and reply:
- The query posed by promoters and Foreign Investor Entity 1 to SEBI was whether they would be required to make an open offer under Regulation 3(2), considering that there is a gross increase in shareholding of promoter and promoter group but there is a net reduction in promoter shareholding by 0.96% post-conversion as preferential allotment is also being made to public category?
SEBI’s Response: No open offer obligation under Regulation 3(2).
Rationale:
Interms of clause (ii) of Explanation to sub-regulation (2) of regulation (3),
“In case of acquisition of shares by way of issue of new shares by the target company or where the target company has made an issue of new shares in any given financial year, the difference between the pre-allotment and the post allotment percentage voting rights shall be regarded as the quantum of additional acquisition”.
Pursuant to the preferential issue, the standalone holding of promoter and promoter group post allotment (excluding the public category) would be increasing more than 5%. However, SEBI clarified that the CCDs/CCPS were simultaneously issued to the proposed allottees and all the proposed allottees shall be converting the proposed CCDs and/or CCPS into equity shares on the same date.