Ujjivan Financial Services Ltd (Ujjivan) on Saturday said its board has approved amalgamation of the company with its subsidiary Ujjivan Small Finance Bank in order to comply with Sebi’s minimum public shareholding norms.
“The decision was taken based on the recommendation of the Audit Committee and the Committee of Independent Directors, the Board of Directors of the Company at its meeting held today i.e. October 30, 2021, has inter-alia, considered and approved a Scheme of Amalgamation (“Scheme”) between Ujjivan Financial Services Limited (“Transferor Company” or “Company”) and Ujjivan Small Finance Bank Limited (“Transferee Company”) and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder,” Ujjivan said in a regulatory filing.
As per the scheme of amalgamation, Ujjivan Financial Services (transferor company) will be merged with Ujjivan Small Finance Bank (transferee company), and the dissolution is to be without the winding-up of the transferor company.
The amalgamation is subject to approval from the Reserve Bank of India (RBI), capital markets regulator Sebi, public shareholders of the companies involved, as well as the NCLT.
Ujjivan is the holding company and promoter of Ujjivan Small Finance Bank (SFB).
Ujjivan presently holds 83.32 per cent of the equity shareholding and 100 per cent of preference shareholding of Ujjivan SFB.
As per the minimum shareholding norms, the promoter’s minimum initial contribution in the SFB arm should be at least 40 per cent.
If the promoter’s initial shareholding in the SFB is in excess of 40 per cent, then it is to be brought down to 40 per cent within a period of five years from the date of commencement of operations of SFB.
“The aforesaid period of five years is expiring on January 31, 2022 for the transferee company (being SFB), and the proposed amalgamation among other business objectives and benefits would enable the transferee company to ensure the aforesaid compliance,” Ujjivan said.
Once the scheme comes to effect, Ujjivan SFB would issue and allot to the shareholders of Ujjivan Financial Services 115 equity shares of the bank for every 10 equity shares of Ujjivan.
Ujjivan said the amalgamation would result in the formation of a larger and stronger entity having a greater capacity for conducting its operations more efficiently and competitively.
It will also lead to better administration and cost reduction, it added.
Source: Mint