sebi:EAD/SR/SM/AO/56-62/2019-20

SEBI · SEBI · 2017-07-10 · Sangeeta Rathod, Adjudicating Officer

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Violation established; penalty imposed jointly and severally

Provisions invoked

• s. 15
• s. 15H
• s. 15J
• s. 28A
• s. 23

Regulations

• Reg. 10
• Reg. 12
• Reg. 44
• Reg. 11(1)
• Reg. 11(2)

Parties

• Noticee 1
• Noticee 2
• Noticee 3
• Noticee 4
• Noticee 5
• Noticee 6
• Noticee 7

Holding

The Adjudicating Officer held that Noticee 1 and Noticee 2 violated Regulations 11(1) and 11(2), Noticees 3, 4 and 5 violated Regulation 11(1), and Noticees 6 and 7 violated Regulation 11(2) of the SAST Regulations, 1997, and imposed a joint and several penalty of Rs. 10,00,000 under Section 15H(ii) of the SEBI Act, 1992.

Full text

Adjudication order in respect of seven entities in the matter of Brand Reality Services Limited Page 2 of 19 Regulations, 1997. The Noticees 1 to 7 are hereinafter referred collectively referred to as Noticees/You.

Adjudication order in respect of seven entities in the matter of Brand Reality Services Limited Page 3 of 19 company. During the Financial Year 2000-2001, the Noticees 3, 4 and 5 who were the promoters of BRSL acquired 10,000 shares (representing 0.33%), 11,000 shares (representing 0.37%) and 2,47,700 (representing 8.24%) shares of BRSL respectively. In view of the said acquisition of shares of BRSL by the said Noticees, the shareholding of the promoter and promoter group increased from 46.60% to 55.54%. In terms of regulation 11(1) of SAST Regulations, 1997, no acquirer who, together with persons acting in concert with him held 15% or more but less than 75% of the shares or voting rights can acquire either by himself or through or with persons acting in concert with him any additional shares or voting rights entitling him to exercise more than 5% of the voting rights in any period of 12 months unless such acquirer makes a public announcement to acquire shares in accordance with the regulations. It is alleged that the Noticees 3, 4 and 5 had acquired the said number of shares without making a public announcement to acquire the shares of BRSL and the said Noticees along with other Noticees 1 and 2 who were also part of the promoter group and or persons acting in concert at the relevant time have failed to make a public offer at that time. The final letter of offer dated October 28, 2015 had been filed by the Noticees 1 & 2. It is therefore, alleged that there has been a delay

Adjudication order in respect of seven entities in the matter of Brand Reality Services Limited Page 4 of 19 voting rights in any period of 12 months and / or in any financial year ending on 31st March (w.e.f. 9-9-2002) unless such acquirer makes a public announcement to acquire shares in accordance with the regulations. It is alleged that the Noticee 5 had acquired the said number of shares without making a public announcement to acquire the shares of BRSL and the said Noticee along with other Noticees 1, 2, 3 and 4 who were also part of the promoter group and / or persons acting in concert at the relevant time have failed to make a public offer at that time. The final letter of offer dated October 28, 2015 had been filed by the Noticees 1 & 2. It is therefore, alleged that there has been a delay of more than thirteen years to make a public announcement to acquire shares of target company in accordance with SAST Regulations, 1997 and therefore the Noticee 5 along with other Noticees 1 to 4 who were the promoters and / or PACs at the relevant time are alleged to have violated regulation 11(1) of SAST Regulations, 1997. c) Further, it is alleged that the shareholding of the promoter and promoter group as on March 31, 2003 was 64.35% of the paid-up share capital of the target company. During the Financial Year 2003-2004, the Noticees 2 and 5 who were the promoters of BRSL acquired 35,000 (representing 1.16%) and 1,40,000 (representing 4.66%) shares of BRSL respectively. In view

Source: SecMarx — sebi:EAD/SR/SM/AO/56-62/2019-20. 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.