Authority: Kamlesh Chandra Varshney, Whole Time Member, Securities and Exchange Board of India (SEBI)

Order Date: August 03, 2026

Case Overview

An application dated July 14, 2026, was received by SEBI from six trusts established by the promoters of Muthoot Microfin Limited (the Target Company). The applicants sought exemption from the mandatory open offer requirements under regulations 3(1), 4, and 5 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations).

The exemption was sought for a proposed indirect acquisition of shares and voting rights in the Target Company. The proposed acquirers are Thomas John Muthoot (MF) Trust, Thomas George Muthoot (MF) Trust, Thomas Muthoot (MF) Trust, Preethi John Muthoot (MF) Trust, Nina George (MF) Trust, and Remmy Thomas (MF) Trust (collectively, the Acquirer Trusts).

The proposed transaction is an internal reorganization within the Muthoot promoter family. It involves a multi-step process of gifting shares of Muthoot Fincorp Limited (MFL) – which holds a 50.21% stake (8,55,95,744 equity shares) in the listed Target Company – to the Acquirer Trusts. The process includes the transfer of existing equity shares and shares to be allotted upon the conversion of Compulsorily Convertible Preference Shares (CCPS) held in MFL. The ultimate goal is for the Acquirer Trusts to collectively acquire 63.35% of the shareholding and control in MFL, thereby indirectly controlling the Target Company.

The application argued that the transaction was a non-commercial, internal family arrangement aimed at streamlining succession and promoting the welfare of the Muthoot family. It was submitted that there would be no change in the ultimate beneficial ownership, control, management, or public shareholding (42.93%) of the Target Company. The promoters' collective shareholding in the Target Company would remain unchanged at 55.47% post-transaction. The rationale for the revised structure, differing from a previously granted exemption order (WTM/KCV/CFD/01/2026-27), was to ensure MFL meets the Minimum Promoters' Contribution (MPC) requirements for its proposed Initial Public Offering (IPO).

The application was evaluated against the conditions stipulated in Chapter 8 of the SEBI Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2023/31. While most conditions were met, one condition required transferors to be disclosed as promoters in the equity shareholding pattern for at least three years. Although the Target Company's equity was listed only in December 2023, SEBI considered the Takeover Panel's observation from a prior related application that the promoters had been disclosed as such in debt issuance documents and annual reports filed with stock exchanges since 2016, thus fulfilling the condition in substance.

Final Outcome

SEBI granted the requested exemption to the six Acquirer Trusts from the obligations to make a public announcement of an open offer for the shares of Muthoot Microfin Limited under regulations 3(1), 4, and 5 of the SAST Regulations, 2011.

The exemption is subject to several conditions:

(a) The acquisition must comply with the Companies Act, 2013 and other applicable laws.

(b) The Acquirer Trusts must file a report with SEBI within 21 days of completing the acquisition.

(c) All statements and facts presented in the application must remain true and correct.

(d) The Acquirer Trusts must ensure compliance with all disclosures, undertakings, and provisions of Chapter 8 of the SEBI Master Circular.

(e) The Trust Deeds must not contain covenants contrary to these conditions and must be modified if necessary, with such modifications reported to SEBI.

The exemption is limited to the open offer requirement and does not exempt the parties from other disclosure requirements under the SAST Regulations, the Prohibition of Insider Trading Regulations, the LODR Regulations, or any other applicable laws. The exemption is valid for one year from the date of the order (until August 02, 2027), within which the proposed acquisition must be completed.

Topics: SEBI Exemption, Takeover Regulations, Promoter Shareholding