Equitas SFB, Equitas Holdings boards approve the scheme of amalgamation

The respective boards of Equitas Holdings and its subsidiary Equitas Small Finance Bank (SFB) have approved the scheme of amalgamation of the two. The scheme of amalgamation proposes the merger of Equitas Holdings into and with Equitas SFB and the dissolution without winding-up of the transferor company (Equitas Holdings).

The boards of directors of the two companies at their respective meetings approved the scheme of amalgamation between Equitas Holdings Ltd (transferor company) and Equitas Small Finance Bank (transferee company), the companies said in separate stock exchange filings.

As per the scheme of amalgamation, each of the equity shareholders of Equitas Holdings will be allotted 231 equity shares for every 100 shares of the transferee company (Equitas SFB). Upon the scheme becoming effective, the Bank will issue equity shares as to the shareholders of the transferor company as on the record date as defined in the scheme.

The amalgamation between the two entities is subject to approvals from RBI, stock exchanges, SEBI as well as the National Company Law Tribunal (NCLT).

The amalgamation between the holding company and the subsidiary SFB is aimed to meet RBI's licensing conditions to bring down the shareholding of the holding company to 40% within five years from the date of commencement of business of the bank, which completed by September 4, 2021.

Further, RBI guidelines also mandate that shares of SFBs should be listed on stock exchanges within three years from the date the net worth reaches Rs 500 crore. The lender had already started operations with a net worth of over Rs 500 crore and complied with the listing guideline by way of initial public offering in November 2020.

RBI guidelines also stipulate that a promoter of an SFB can exit after completing a lock-in period of five years, subject to regulatory approvals.

"Considering that transferor company is a company with no identifiable promoter and all its shareholders are public shareholders, issue of shares under the scheme would result in an increase of public shareholding in the bank from 25.41% (as on date) to 100%," Equitas SFB said in the filing.

(With inputs from PTI)