The Securities and Exchange Board of India (SEBI) has reportedly approved the indirect acquisition of Shriram Properties by the company’s Chairman and Managing Director, Murali Malayappan. Malayappan currently holds a 0.08% stake in Shriram Properties, a small-cap company with a market capitalisation of Rs 18.74 billion.

Key shareholders in the company include Shriram Group Executives Welfare Trust (SGEWT), with a 0.14% stake, and Shriram Properties Holdings Private Limited (SPHPL), which owns 27.72%, while the public shareholding accounts for 72.06%.

SEBI’s exemption order clarified that the indirect acquisition would not result in any change in the control of Shriram Properties. Post-acquisition, the promoter and promoter group will reportedly retain a combined stake of 27.94%. Malayappan has proposed acquiring 1,338,335 equity shares of SPHPL, representing 70.86% of SPHPL’s share capital, from SGEWT at an indicative price of Rs 900 per share. Following this transaction, Malayappan’s stake in SPHPL is expected to rise from 20% to 91.19%.

Malayappan applied for an exemption from SEBI’s open offer requirements under the Substantial Acquisition of Shares and Takeovers (SAST) Regulations. SEBI’s whole-time member, Ashwani Bhatia, in the exemption order, stated that the proposed transaction would not affect or prejudice the interests of public shareholders of Shriram Properties.

The Takeover Panel recommended granting the exemption, which SEBI approved, citing that the transaction would not alter the control of Shriram Properties. In the order, Bhatia noted, “I, in exercise of the powers conferred upon me under Section 19 read with Section 11(1) and Section 11(2)(h) of the SEBI Act, 1992, and regulation 11(5) of the Takeover Regulations, 2011, hereby grant exemption to the Proposed Acquirer, Mr. Murali Malayappan, from complying with the requirements of regulations 3(1), 4 and 5(1) of the Takeover Regulations, 2011, with respect to the proposed indirect acquisition.”

This development underscores SEBI’s approval for regulatory flexibility in transactions that do not alter control, while safeguarding the interests of public shareholders.