Markets regulator SEBI today said Jammu & Kashmir Government can transfer its 8.23 per cent stake in Jammu & Kashmir Bank to the Union Territory of Ladakh, subject to the lock-in in the hands of transferee.Post the transfer of shares, UT of Ladakh will continue to be the promoter of the bank.The clarifications have been given as part of an informal guidance sought by Jammu & Kashmir Bank regarding certain aspects of SEBI’s ICDR (Issue of Capital and Disclosure Requirements) rules. The bank sought Sebi’s guidance whether UT of J&K can transfer the shares to UT of Ladakh, subject to the continuation of lock-in in the hands of the transferee.The transaction is being undertaken following a notification issued on October 30, 2020 by J&K Government. Under this, the Government issued guidelines for apportionment of assets and liabilities of the erstwhile state of J&K between UT of J&K and UT of Ladakh, including transfer of 8.23 per cent stake in the bank to UT of Ladakh.Pursuant to the legal provisions and notification, the activity to be undertaken is apportionment of assets of liabilities as opposed to be the general transfer of shares, the bank said in its interpretative letter.In its reply made to public on Friday, Sebi said, ” the proposed transfer of shares of the bank by the Government of J&K, being the current promoter, to UT of Ladakh, which would also be classified as a promoter of the bank would be permissible under … ICDR Regulations subject to the applicability of other provisions of the law”.It, further, said the ICDR rules allow transfer of locked-in shares among the promoters or promoter group subject to the lock-in continuing for the remaining period with the transferee.The permission would be applicable irrespective of whether the transfer is a result of apportionment of assets following J&K Reorganization Act, it added.Under the ICDR rules, the specified securities allotted on a preferential basis to the promoter or promoter group and the equity shares allotted following the exercise of options attached to warrants issued on a preferential basis to the promoters or the promoter group should be locked-in for three years.Further, the specified securities, held by promoters and locked-in, can be transferred among promoters or promoter group or a new promoter. However, the lock-in on such securities will continue for the remaining period with the transferee.Noting this position is based on the information furnished, Sebi said, “different facts or conditions might lead to a different interpretation”.“This letter does not express a decision of the board on the question referred,” the regulator added.Earlier in March, the J&K Government committed to infuse Rs 500 crore in the bank and accordingly, the bank started the process to allot 16.76 crore equity shares to the J&K Government, the promoter and majority shareholder of the bank. The equity shares to be allotted are locked-in for three years.In August, the regulator had exempted the Jammu & Kashmir Government from complying with its norms on substantial acquisition of shares and takeovers in the proposed acquisition of 16.76 crore equity shares (6.06 per cent) of the bank during 2021-22.Thereafter, Reserve Bank earlier this month accorded approval to Jammu & Kashmir Government to acquire the shares in J&K Bank on preferential basis
