In an Informal guidance on reclassification of promoters under Regulation 31A of the SEBI LODR Regulations, SEBI has stated that daughters of the promoter who hold more than 10 per cent of the voting rights in the listed entity, although they are independently living and not involved in the management of the Company are nevertheless not eligible to be re-classified from promoter to public category. In the instant case, the daughters names did not form part of the “promoter and promoter group category” under Regulation 31 of the SEBI LODR Regulations. However, their father, who was the Promoter and MD of the Company wished to gift his shareholding to his daughters. Informal guidance was sought on whether subsequent to the transfer of the shares, their names would form part of the promoter category and whether the daughters names could be reclassified in the ‘Public Category’ so that they may not be restricted by the closure of the trading window as applicable to promoter and promoter group, by merely falling under this definition.
SEBI opined that by virtue of the definition of ‘promoter group’ under the SEBI ICDR Regulations, daughters of the promoter are immediate relatives irrespective of the fact that they live separately and are not involved in the management of the company. Further, by virtue of Regulation 31(6)(A) of the LODR Regulations, upon a gift of shares by the promoter the recipient of the shares shall be classified as belonging to the promoter group.
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