On April 2, 2025, Naresh Malhotra, a prominent promoter of Prime Focus Limited (PFL), made a significant disclosure regarding the creation of encumbrance on his shares in the company. This move was in compliance with Regulation 31(1) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations), following the SEBI Master Circular issued on February 16, 2023.

Details of the Transaction:

As of the date of the disclosure, Mr. Naresh Malhotra holds 5,86,75,296 equity shares in Prime Focus Limited, which represent 19.56% of the company’s paid-up equity share capital. The promoter and promoter group collectively holds 69.85% of the company’s total equity. The transaction involves the creation of encumbrance over a total of 42,756,867 equity shares held by Mr. Malhotra, which corresponds to approximately 20.40% of the promoter group’s shareholding. The encumbrance has been created in favor of two entities:

1. Itiame Ltd has agreed to acquire 2,55,71,757 shares, accounting for 8.52% of the total share capital of the company.

2. Bresino Projects Ltd is set to acquire 17,185,110 shares, representing 5.73% of the company’s total equity.

Both agreements were made on March 31, 2025, with the shares to be acquired through the block window facility on the stock exchange as per applicable laws and pricing guidelines.

Key Details and Terms:

The creation of encumbrance for both entities follows specific undertakings within the agreements. These include a covenant not to sell the shares for a certain period, ensuring that Mr. Malhotra cannot dispose of the encumbered shares without prior consent from the respective entities. These terms are in alignment with the Takeover Regulations as defined under Chapter V of the SEBI guidelines.

Compliance with SEBI Regulations:

The disclosure by Mr. Malhotra was filed with both the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange of India) on April 2, 2025, to ensure full compliance with Regulation 31(1) of the Takeover Regulations. This regulation mandates the disclosure of any encumbrance or invocation on shares by promoters or persons acting in concert (PACs).

Why is This Important?

This disclosure is a part of transparency measures to keep the market informed about any significant changes in the ownership structure of a listed company. The creation of encumbrance signals potential financial transactions or restructuring activities within the company and its promoters. It is also an important regulatory requirement to ensure fairness and avoid any market manipulation or misrepresentation.

Next Steps:

The shares under encumbrance have not yet been sold or transferred but are subject to the terms of the agreements. If these conditions are fulfilled, the encumbrance may be released or modified. In accordance with the SEBI regulations, further disclosures will be made as the situation develops, particularly if the shares are transferred to Itiame Ltd or Bresino Projects Ltd.

In conclusion, this disclosure marks a key development for Prime Focus Limited, shedding light on changes within the promoter group and potential upcoming transactions that could impact the company’s shareholding and stock market performance. Naresh Malhotra’s careful adherence to SEBI’s stringent guidelines emphasizes his commitment to regulatory transparency and corporate governance.

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