sebi:AK/AO-70-72/2015
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Facts / Headnote
Violation established against company and promoters for failure to achieve minimum public shareholding by prescribed methods; liability under Sections 23E and 23H of SCRA
Provisions invoked
- s. 19
- s. 23E
- s. 23
- s. 21
- s. 23H
Regulations
- Reg. 13(4)
Parties
- M/s. Tulive Developers Ltd.
- Mr. Atul Gupta
- Mr. K.V. Ramana
Holding
The company and its promoters did not adopt the prescribed methods under SEBI circulars read with proviso to Rule 19A(1) SCRR to achieve 25% minimum public shareholding, thereby failing to comply with Clause 40A and violating Section 21 SCRA and proviso to Rule 19A(1) SCRR, attracting adjudication under Sections 23E and 23H SCRA.
Full text
Adjudication Order in the matter of M/s. Tulive Developers Ltd. Page 2 of 25 recorded that in view of the deviation from the methods mentioned in the circulars for bringing the shareholding of the shareholders in the company at the stipulated minimum level of 25% noted, the case may be referred for adjudication proceedings under Section 23E and 23H of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as ‘SCRA’) read with the Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005 (hereinafter referred to as ‘the Rules’).
Adjudication Order in the matter of M/s. Tulive Developers Ltd. Page 3 of 25 CIR/CFD/DIL/10/2010 dated December 16, 2010, CIR/CFD/DIL/1/2012 dated February 08, 2012 and CIR/CFD/DIL/11/2012 dated August 29, 2012 read with proviso to Rule 19A(1) of the Rules, thereby, failing to comply with Clause 40A of the Listing Agreement and directions issued by SEBI by the aforementioned circulars, and have, thus, violated the provisions of Section 21 of the SCRA and proviso to Rule 19A (1) of the Rules.
Adjudication Order in the matter of M/s. Tulive Developers Ltd. Page 4 of 25 for secondary sale in many cases on case to case basis and their facts would have justified such approval; f. That, hence, since they believed that the OFS facility provided by SEBI could not be availed by promoters of their company and they would have to sell the equity shares in the secondary market, therefore, the promoters sold 2.97% shares in open market through secondary route on the floor of the exchange; g. That the promoters have been at a loss by not being entitled to avail the OFS process for sale / divest of the excess shareholding. Correspondingly, the investors / public shareholders have been benefited by the sale in the open market through stock exchange; h. That the sale of shares by the promoters on the floor of the exchange in belief of a bonafide interpretation of the SEBI circular cannot be considered as a default.
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Source: SecMarx — sebi:AK/AO-70-72/2015. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.