Morepen Laboratories Limited has formalised a key update in its ongoing business restructuring process. The company executed an addendum to its previously signed Business Transfer Agreement (BTA) with its subsidiary, Morepen Medipath Limited (MML)—formerly known as Morepen Medtech Limited—on May 12, 2025. The primary objective of this addendum is to revise the ‘appointed date’ for the transfer of Morepen’s Medical Devices Business on a slump sale basis as a going concern.

This development is crucial for shareholders and stakeholders tracking the company's strategic moves and restructuring efforts.

Background of the Agreement

The original Business Transfer Agreement (BTA) was signed on March 18, 2025, between Morepen Laboratories and its subsidiary MML. The transaction aimed to hive off the Medical Devices Business of the parent company into its subsidiary on a slump sale basis, treating the business as a going concern.

The slump sale is being conducted in accordance with the valuation norms under Rule 11UAE of the Income Tax Rules, 1962, which means it is based on a fair market value assessment under government-approved norms.

The revised addendum dated May 12, 2025, now updates the ‘appointed date’ of the transfer but does not alter any other material terms or obligations under the original agreement.

Nature of the Business Transfer

The Medical Devices Business of Morepen Laboratories includes various equipment and health diagnostic tools that contribute significantly to the company’s diversified portfolio. By transferring this unit to MML, Morepen is streamlining operations, possibly allowing the subsidiary to focus exclusively on healthcare technologies and devices, thereby enhancing operational efficiency and segment-specific growth.

This kind of transaction is known as a slump sale, which is a transfer of an undertaking for a lump sum consideration without values being assigned to individual assets and liabilities. It is commonly used for business restructuring and divestments.

Details of Shareholding and Related Party Transaction

Morepen Laboratories holds 80% of the paid-up equity share capital of MML, with the remaining 20% owned by individuals and entities belonging to the promoter group or relatives of the promoters. Given this ownership structure, MML qualifies as a related party under applicable SEBI and company law regulations.

However, it is important to note that the transaction is being executed on an arm’s length basis, meaning the terms are comparable to those that would have been agreed upon by unrelated parties in a similar situation. This ensures transparency and fairness in the deal structure.

Key Terms of the Original Agreement

The original BTA executed in March 2025 contained several important clauses:

• Transfer of all rights, title, and interest in the Medical Devices Business to MML.

• The deal is structured on a slump sale basis, as per Indian tax law norms.

• The final consideration amount is subject to certain closing date adjustments based on agreed terms and performance.

• All other terms and covenants are standard commercial clauses, involving representations, warranties, and indemnities as typically found in such business transfer agreements.

Purpose and Impact of the Addendum

The addendum executed on May 12, 2025, specifically updates the ‘appointed date’ of the business transfer. This is the date on which ownership and operational control of the Medical Devices Business is deemed to be passed to MML.

By revising the appointed date:

• Both parties can align the transfer with their financial, regulatory, or operational goals.

• It may also offer fiscal advantages in terms of tax or balance sheet impacts.

• The addendum ensures that all related clauses in the original BTA are updated to reflect this change while keeping the remainder of the agreement unchanged and fully effective.

There is no impact on the core structure of the transaction or its validity.

Implications for Stakeholders

For investors, analysts, and business watchers, this update has several implications:

• It reflects Morepen Laboratories’ continued focus on organisational restructuring for better business segmentation.

• The deal might pave the way for independent growth of the Medical Devices Business under a more focused corporate structure.

• It reinforces governance practices by maintaining transparency in related party transactions and adhering to arm’s length principles.

Regulatory Disclosures and Transparency

The company has made full disclosures as per SEBI’s Listing Obligations and Disclosure Requirements (LODR) Regulations, detailing:

• The parties involved (Morepen Labs and MML)

• Nature and purpose of the agreement

• Shareholding structure and related party relationship

• Whether the transaction was at arm’s length

• Confirmation that no shares were issued as part of this agreement

• Clarification that no conflicts of interest or board nominations arise from the deal

This adherence to regulatory protocols adds credibility to the transaction and aligns with best practices in corporate governance.

Conclusion

The execution of an addendum to the Business Transfer Agreement between Morepen Laboratories Limited and its subsidiary Morepen Medipath Limited marks a subtle but important step in the company’s strategic roadmap. By revising the appointed date of the business transfer, the company ensures greater alignment of internal operations while continuing to strengthen the business structure around specialised units.

The slump sale of the Medical Devices Business, being done at fair market value and in compliance with tax and corporate laws, reflects Morepen’s long-term commitment to strategic clarity and operational excellence.

This development is closely watched by industry observers and investors alike, as it could potentially signal a stronger, more agile subsidiary ready to take on the competitive healthcare technology space.

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