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The board of Ujjivan Financial Services has approved the amalgamation of the company with its subsidiary, Ujjivan Small Finance Bank, to meet the minimum public shareholding norms of SEBI.
Ujjivan Finance Services currently holds 83.32 per cent of the total paid-up equity share capital of Ujjivan SFB.
“Accordingly, the scheme, if implemented, will result in increase in shareholding of public shareholders of the Transferee Company from 16.68 per cent to 100 per cent, subject to receipt of requisite approvals,” said Ujjivan Financial Services in a stock exchange filing.
SEBI, RBI approval
The scheme of amalgamation is subject to approval from the Reserve Bank of India, SEBI, NCLT and public shareholders of the company.
Under RBI norms, the promoter’s minimum initial contribution to the paid-up equity capital of SFB should be at least 40 per cent, which shall be locked in for a period of five years from the date of commencement of operations of SFB. Further, if the promoters’ initial shareholding in SFB is in excess of 40 per cent, then it has to be brought down to 40 per cent within five years from the date of commencement of operations of SFB.
In the case of Ujjivan SFB, the five-year period expires on January 31, 2022, and the proposed amalgamation among other business objectives and benefits will enable it to ensure the compliance, added Ujjivan Financial Services.
“The amalgamation is in line with the conditions prescribed in the SFB guidelines and will result in the formation of a larger and stronger entity having greater capacity for conducting its operations more efficiently and competitively; the amalgamation will avoid operational inefficiency in the group by operating one listed entity and create synergies,” said Ujjivan.
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