Ujjivan Financial Services Board of Directors approves merger with Ujjivan SFB

New Delhi: Ujjivan Financial Services Ltd (Ujjivan) announced on Saturday that its board of directors has approved the company’s merger with its subsidiary Ujjivan Small Finance Bank in order to meet Sebi’s minimum public ownership requirements.

“The decision was made on the basis of the recommendation of the Audit Committee and the Committee of Independent Directors. The Company’s Board of Directors, at its meeting today, ie on the 30th” Agreement “) between Ujjivan Financial Services Limited (” Transfer Company “or” Company “) and Ujjivan Small Finance Bank Limited (the “Transfer Company”) and its respective shareholders and creditors pursuant to Sections 230-232 and other applicable provisions of the Companies Act, 2013 and the rules set forth therein, “said Ujjivan in a regulatory filing.

According to the merger plan, Ujjivan Financial Services (transferring company) will be merged with Ujjivan Small Finance Bank (receiving company) and the dissolution will take place without liquidation of the transferring company.

The merger requires the approval of the Reserve Bank of India (RBI), the capital market regulator Sebi, the public shareholders of the companies involved and NCLT.

Ujjivan is the holding company and promoter of Ujjivan Small Finance Bank (SFB).

Ujjivan currently holds 83.32 percent of the shares and 100 percent of the preferred shares in Ujjivan SFB.

According to the minimum participation norms, the minimum contribution of the project sponsor in the SFB branch should be at least 40 percent.

If the initial participation of the project sponsor in the SFB exceeds 40 percent, it must be reduced to 40 percent within five years from the start of the SFB’s activity.

“The above-mentioned five-year period will expire on January 31, 2022 for the acquiring company (as SFB).

Once the scheme goes into effect, Ujjivan SFB would issue 115 shares of the bank for every 10 shares of Ujjivan and allot them to the shareholders of Ujjivan Financial Services.

Ujjivan said the merger would result in the formation of a larger and stronger entity with greater capacity to conduct its operations more efficiently and competitively.

It will also lead to better management and cost reduction, she added.

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