Navigating Shareholder Shifts: CHL Limited's Preferential Issue and SEBI Guidance

CHL Limited, a company listed on BSE Ltd. since July 2008, recently sought clarity from the Securities and Exchange Board of India (SEBI) regarding a proposed fundraising activity. This query was made under the SEBI (Informal Guidance) Scheme, 2003.

- Anirudha Jain

The company is contemplating raising funds through a preferential issue of compulsorily convertible preference shares (CCPS) and/or compulsorily convertible debentures (CCDs). These instruments are intended to be issued to a group of investors, including members of the promoter and promoter group and certain public category investors.

The Current Picture (Before the Issue)

As of the date of the application for guidance, the shareholding pattern of CHL Limited.

1. Promoter and Promoter Group, holding, 3,99,30 72.84% of the equity shares.

2. The Public held the remaining 27.16%.

Key members of the promoter group include various individuals from the Malhotra family and Malbros Investment Inc which holds 58.9% in CHL. Mr. Lokesh Malhotra is part of the promoter group, holding direct (0.82%) and indirect (49.08%) interests through Malbros Investment Inc in which Lokesh Malhotra holds 83.4%.

The Proposed Transaction

Change in ownership

Preferential issue to promoters is planned as under:

An entity incorporated in British Virgin Island (“Foreign Investor 1”) which is entirely owned & controlled by Mr. Lokesh Malhotra.

Individual members of Malhotra family viz., Mr. Gagan Malhotra, Mr. Luv Malhotra & Mr. Lokesh Malhotra.

Preferential issue to public is planned as under:

An entity incorporated in India (“Domestic Investor Entity”) which is own by shareholders who already own 1.15% equity stake in CHL as public.

An investor entity incorporated in Malta, Europe.

The issued CCPS and/or CCDs are planned to convert into equity shares within 18 months, specifically during the financial year 2026-2027. Each resulting equity share would have a face value of INR 2/- and carry one voting right, with no differential voting rights.