Ujjivan Financial Services Board of Directors Approves Merger with Ujjivan Small Finance Bank | Economic news


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

The decision was made based on the recommendation of the audit committee and the committee of independent directors at a meeting held on Saturday, Ujjivan said in a regulatory filing.

In accordance with the merger plan, Ujjivan Financial Services (ceding company) will be merged with Ujjivan Small Finance Bank (ceding company), and the dissolution will take place without liquidation of the ceding company.

The merger is subject to the approval of the Reserve Bank of India (RBI), capital markets regulator Sebi, public shareholders of the companies involved, as well as the NCLT.

Ujjivan is the holding company and promoter of Ujjivan Small Finance Bank (SFB).
Ujjivan currently owns 83.32 percent of the shares and 100 percent of the preferred shares of Ujjivan SFB.

In accordance with the minimum shareholding standards, the minimum initial promoter contribution in the SFB branch must be at least 40 percent.

If the promoter’s initial stake in SFB is greater than 40 percent, it must be reduced to 40 percent within five years from the date of commencement of SFB operations.

“The aforementioned five-year period expires on January 31, 2022 for the transferee company (being SFB), and the proposed merger among other business objectives and benefits would enable the transferee company to achieve the aforementioned compliance,” Ujjivan said.

Once the program comes into effect, Ujjivan SFB would issue and allot to the shareholders of Ujjivan Financial Services 115 shares of the bank for 10 shares of Ujjivan. Also Read: Aadhaar Map Update: Here’s How To Check If Someone Is Abusing Your Aadhaar

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 administration and lower costs, he added. Also read: Big Bank, GPL and WhatsApp changes will take effect from November 1, check how you will be impacted

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