The Securities and Exchange Board of India (SEBI) has granted an exemption to the Vadilal promoter family's private trust, IVG Trust, from making a mandatory open offer for the proposed acquisition of promoter shareholding in Vadilal Enterprises Ltd. According to SEBI's order, the exemption will allow the transfer of promoter stakes to the trust as part of the family's succession planning without triggering the open offer obligations under SEBI's takeover regulations. SEBI Whole-Time Member Kamlesh Chandra Varshney granted the exemption in two separate orders issued on July 3, specifically exempting IVG Trust from the provisions of the Takeover Code. As reported by SEBI, the regulator concluded that the proposed transactions are part of an internal family succession plan rather than a commercial acquisition, with the restructuring involving no commercial consideration, not changing the promoter group's overall shareholding, and not altering the management or control of either company.
As reported by SEBI, IVG Trust will acquire both the direct and indirect shareholding of the promoter family in Vadilal Enterprises. The market regulator emphasized that the restructuring does not result in any change in the company's effective ownership or control, as the ultimate control will continue to remain with the existing promoter family. SEBI noted that the transfer is part of an internal family succession arrangement through a private trust and does not alter the public shareholding pattern of the company. The restructuring involves no commercial consideration, does not change the promoter group's overall shareholding, and does not alter the management or control of either company. Importantly, SEBI confirmed that neither ownership control nor company management will change after the restructuring, with the exemption providing clarity on the promoter shareholding structure without affecting minority shareholders.
The restructuring revolves around IVG Trust, an irrevocable discretionary private family trust established in July 2025. The trust was created by Ila V. Gandhi, while Virendrabhai Ramchandra Gandhi and Janmajay Virendrabhai Gandhi serve as trustees. The beneficiaries include Virendrabhai Gandhi, Ila Gandhi, Janmajay Gandhi and their lineal descendants. The trust subsequently amended its documentation and provided fresh undertakings, demonstrating compliance with SEBI's February 2023 circular governing promoter family trusts. These safeguards include mirroring the existing promoter shareholding, having only promoters and immediate family members as trustees and beneficiaries, restricting transfer or encumbrance of beneficial interests, requiring annual compliance certification by an independent auditor, and mandating timely disclosures of any material changes. During its review, SEBI sought clarifications regarding documentation, including differences in KYC records, the trust deed and stock exchange disclosures, ensuring the trust qualified for exemption under the Takeover Code.
According to SEBI's order, the transfer must be completed within one year from the date of SEBI's order. The trust will also be required to comply with annual reporting and other conditions prescribed by SEBI to ensure continued adherence to the exemption framework. The exemption has been granted specifically from the requirement to make a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, with all other applicable regulatory requirements continuing to apply. For long-term investors, the decision reduces uncertainty around promoter succession and reinforces governance continuity, while the exemption is unlikely to have a direct impact on the companies' financial performance but removes a potential regulatory hurdle.
For Vadilal Industries, IVG Trust will directly acquire 2,81,458 shares, representing 3.92% of the company's equity. The transfer will take place after Ila Gandhi and Janmajay Gandhi gift their shares to Virendrabhai Gandhi, who will then transfer the consolidated holding to IVG Trust. The trust will also indirectly acquire control of promoter entities including Vadilal International Pvt. Ltd., Vadilal Finance Company Pvt. Ltd., and Veronica Constructions Pvt. Ltd., which together own 47.2% of Vadilal Industries. In Vadilal Enterprises, IVG Trust will directly acquire 10.64% equity through transfers from Virendrabhai Gandhi after he consolidates shares received as gifts from Ila Gandhi and Janmajay Gandhi. The trust will also indirectly acquire another 5.02% stake through acquiring an 88% interest in promoter entity Axilrod Pvt. Ltd.. SEBI confirmed that the promoter group's aggregate holding will remain unchanged at 64.72% in Vadilal Industries and 51.06% in Vadilal Enterprises, while public shareholding will continue at 35.28% and 48.94% respectively. The SEBI order is neutral to positive for shareholders of both companies, removing regulatory uncertainty while preserving ownership continuity and providing clarity on the promoter group's future ownership structure.
