sebi:EAD-2/AO/38-42/2013-14
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Facts / Headnote
Penalty imposed on Noticees for violation of Regulation 11(1) of SAST Regulations
Provisions invoked
- s. 15
- s. 81
- s. 15H
- s. 15J
Regulations
- Reg. 2(1)
- Reg. 12
- Reg. 11(1)
- Reg. 11
Parties
- Noticee No.1 (Managing Director and promoter of KGL)
- Noticee No.2 (promoter of KGL)
- Noticee No.3
- Noticee No.4
- Noticee No.5
Holding
The Noticees violated Regulation 11(1) of the SAST Regulations by acquiring shares beyond 5% in a financial year without making a public announcement of offer, and are liable for a monetary penalty of Rs. 15,00,000/- under Section 15H of the SEBI Act, jointly and severally.
Full text
Page 2 of 11 be referred to as 'Noticee No.1 to 5' respectively and collectively is referred to as ‘Noticees’. Noticee No. 1 is the Managing Director and promoter of KGL, Noticee No.2 is the promoter of KGL and Noticee No. 3, Noticee No.4 and Noticee No. 5 were ‘Persons Acting in Concert’ (hereinafter referred to as PAC’s) with the promoters as submitted by KGL to the BSE in the quarterly shareholding pattern of the company as on December 31, 2005 and March 31, 2006. KGL had issued 19,99,600 warrants to Noticee No. 3, 4 and 5 on April 02, 2005 and the same were converted into 19,99,600 equity shares on December 29, 2005. Consequent to the conversion of warrants into equity shares the shareholding of Noticee No. 1 and 2 along with Noticee No. 3, 4 and 5 as persons acting in concert went up from 31.85 % to 49.11% i.e. by 17.26%. Upon such acquisition of shares of KGL, the Noticees were required to make public announcement of offer in accordance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as 'SAST Regulations') but they failed to do so.
Page 3 of 11 Notice, Reply & Personal Hearing 5. A Notice dated September 11, 2012 (hereinafter referred to as ‘SCN’) was issued to the Noticees in terms of Rule 4 of the Adjudication Rules to show cause as to why an inquiry should not be held against them for the alleged violations. The SCN was sent to the Noticees by Registered Post which was delivered and acknowledged by the Noticee No.1, 2 and 3. However, it was returned undelivered for Noticee No. 4 and 5. It was alleged in the SCN that the Noticees failed to make public announcement of offer as required under Regulation 11(1) of SAST Regulations.
Page 4 of 11 (a) The Noticee Nos. 1 and 2 are the promoters of KGL since inception and have been in control and management. Over the years the company had steadily grown, expanded manifold and also gained acceptability. KGL has handsomely rewarded the shareholders with bonus issues and regular dividends which also reinforces promoters/management's commitment towards the shareholders. (b) They have always maintained transparency in business and affairs and taken care of shareholders interest. They have a clean track record and no action has been taken against them by SEBI save and except the present notice under reply.
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Source: SecMarx — sebi:EAD-2/AO/38-42/2013-14. 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.