Any inter-se transfer of shares by a promoter to his wife will be considered as sale even if it is in the form of a gift where no monetary transaction is involved, Sebi said.
According to guidelines, the promoters are not eligible for preferential allotment of shares or warrants if there has been any inter-se transfer of shares among promoter group firms in the last six months.
Giving its views on an application filed by KJMC Financial Services, the watchdog said that as envisaged in the Sebi ICDR (issue of capital and disclosure requirements) regulations, any transfer of shares in the form of gift will be considered as sale.
As per Sebi’s ICDR regulations, if any person belonging to the promoter or promoter group in the issuer company has sold his equity shares during the six months preceding the relevant date, such entity will be ineligible for allotment of specified securities on a preferential basis.
KJMC Financial Services had sought an interpretative letter from Sebi on whether transfer of shares by its promoter to his wife by way of gift will be considered as sale under the Sebi’s ICDR regulations.
“Our view is that the inter-se transfer by way of gift will be considered as sale as envisaged… in the Sebi ICDR regulations,” Sebi said, adding that its response is based on the information given in the company’s letter.
Referring to the ICDR regulations, the regulator said: “The primary intention of the regulation was not with respect to consideration, but with change in ownership of equity shares.”
It added: “Different facts or conditions might lead to a different result. Further, this letter does not express a decision of the board on the questions referred.”
The watchdog also said its views are expressed with respect to the clarification sought in terms of Sebi ICDR norms and is not applicable to any other Sebi regulations.