Cipla’s Yusuf Hamied Puts In Place A Pact To Ensure Family Control  

Cipla Ltd.’s controlling family led by Yusuf Khwaja Hamied has struck an agreement that any member looking to sell shares should first offer them to other promoters, a move that will strengthen their control over the drugmaker.

If any promoter entity party to the shareholder pact “wishes to transfer their shares in the company… shall first offer the other parties pre-emptive rights to acquire such shares”, the company said in a filing. The share transfer will be subject to terms and conditions agreed that the company didn’t disclose.

Hamied and his brother Mustafa Khwaja Hamied own 24.65 percent stake in the company, according to the filing on Wednesday. The rest of the promoter group owns 12.06 percent. Daughters of Hamied’s sister Sophie Ahmed – Farah Barua, Sara Ahmed, Monisha Ahmed – own 0.81 percent stake in the company and are not part of the shareholder agreement.

Hamied had sought informal guidance from the market regulator for such an agreement in October 2014, saying the family wanted to exercise voting rights as a single unit “during the lifetime” and “after the demise” of the brothers, according to disclosure made to exchanges.

He had also sought exemption from the Securities and Exchange Board of India from making an open offer if such an agreement was inked. SEBI had allowed the exemption subject to conditions. The market regulator’s takeover code mandates an open offer to acquire 26 percent from public shareholders if a single entity’s stake in a listed company crosses 25 percent.

Key highlights of the proposed agreement disclosed as part of informal guidance Hamied sought from SEBI in 2014:

• In the event of demise of YK Hamied and MK Hamied, the Hamied family shall jointly exercise voting with respect to the company as a single unit under the overall direction and supervision of the member of the Hamied family who owns the highest number of shares.
• Farida Hamied and Samira Faziralli and entities which currently own 7.2 percent collectively agreed to appoint YK Hamied as their authorised representative or proxy to vote in all general meetings.
• Shirin Hamied, Kamil Hamied, Rumana Hamied, which currently own 8.33 percent, will appoint MK Hamied as authorised representative or proxy at general meetings.