sebi:ASK/AO-54/2014
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Facts / Headnote
Violation of Regulation 7(1A) of SAST Regulations, 1997 established; penalty of Rs. 3,00,000 imposed under Section 15A(b) of SEBI Act
Provisions invoked
- s. 15A
- s. 15I
- s. 15J
- s. 15
Regulations
- Reg. 7
- Reg. 7(1)
- Reg. 11
- Reg. 10
- Reg. 11(1)
- Reg. 2(b)
- Reg. 35
- Reg. 2(a)
- Reg. 35(2)(a)
Parties
- M/s Hotex Company Ltd.
Holding
The Noticee, M/s Hotex Company Ltd., violated Regulation 7(1A) of the SAST Regulations, 1997 by failing to disclose the sale of shares contributing to a change of more than 2% of GHCL Ltd.'s share capital within two days, and a penalty of Rs. 3,00,000 was imposed under Section 15A(b) of the SEBI Act.
Full text
Order in respect of M/s Hotex Company Ltd. in the matter of GHCL Ltd. Page 2 of 18 March 27, 2014 disclosures which have led to alleged violation of regulation 7(1A) of SAST regulations.
Order in respect of M/s Hotex Company Ltd. in the matter of GHCL Ltd. Page 3 of 18 March 27, 2014 given an opportunity of hearing on July 2, 2012. The Noticee attended the hearing through its authorized representatives and sought an extension of 10 days to file the reply. The Noticee subsequently filed a reply dated June 11, 2012 which was received on July 14, 2012. The Noticee’s main submissions in respect of the charges in the SCN are given as under : • The company is one of the promoters of GHCL and immediately prior to the investigation period, it was holding 1,00,078 shares of GHCL which is 0.10% of the share capital of GHCL. • In or around August 01, 2007 to September 30, 2007, the company pledged 1,00,000 shares of GHCL with Hexagon Commercial Pvt. Ltd. in connection with the loan facility availed by Carissa Investments Pvt. Ltd. • The sale of shares was executed by the lender to whom the shares were pledged and not by the Noticee. • The shareholding of the noticee in GHCL prior to sale of impugned 1,00,000 shares was only 1,00,078 shares (about 0.10% of the capital of GHCL), which is much below 15% limit of Regulation 11(1). Hence, regulation 7(1A) was not applicable on the Noticee. • The disclosure under Regulation 7(1A) is acquirer specific and hence individual shareholding of the Noticee only needs to be considered excluding the Persons Acting in Concert (PACs). • The Noticee was a promoter of GHCL was not acting as PAC. The shares were sold by the lender and so th
Order in respect of M/s Hotex Company Ltd. in the matter of GHCL Ltd. Page 4 of 18 March 27, 2014 • The noticee has been charged merely because it was a promoter. A promoter may not be a PAC and the concept of PAC is acquisition specific. • Regulation 7(1A) is limited and restricted to those acquirers who have acquired shares or voting rights of a company under sub-regulation (1) of regulation 11, or under the second proviso to sub-regulation (2) of regulation 11 of SAST Regulations.
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Source: SecMarx — sebi:ASK/AO-54/2014. 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.