sebi:EAD-5/SVKM/DS/AO/91/2017-18

SEBI · SEBI · 2013-07-22 · S V Krishnamohan, Chief General Manager & Adjudicating Officer

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Facts / Headnote

Violations established; monetary penalty imposed

Provisions invoked

Regulations

Parties

Holding

Maharashtra Polybutenes Ltd. violated Section 12A(a) to (c) of SEBI Act, 1992, Regulations 3(a) to (d), 4(1) and 4(2)(a) and (g) of PFUTP Regulations, 2003 and Regulation 13(6) of PIT Regulations, 1992, and was imposed a total monetary penalty of Rs.20,00,000.

Full text

Adjudication Order in respect of Maharashtra Polybutenes Ltd. in the matter of Maharashtra Polybutenes Ltd. Page 2 of 20

Adjudication Order in respect of Maharashtra Polybutenes Ltd. in the matter of Maharashtra Polybutenes Ltd. Page 3 of 20 dated March 31, 2015, Noticee filed additional submissions. Subsequent to the transfer of erstwhile Adjudicating Officer, another opportunity of hearing was also provided to the Noticee on June 29, 2015 vide notice dated June 22, 2015. The Noticee requested for rescheduling of the hearing. Accordingly, the hearing was rescheduled to July 06, 2015. The Authorized Representative of the Noticee appeared for the hearing and reiterated the submissions made vide letter dated March 11, 2015. In the hearing dated July 06, 2015, Noticee submitted the following: a. On the charge of creation of artificial volume and price manipulation against Noticee as detailed at para no.6 of the SCN, the Authorized Representative submitted that he will file reply latest by July 10, 2015. b. With regard to the charge of non-disclosure of change in shareholding pattern it was admitted that the disclosure was incomplete in terms of the prescribed Regulations to the company. However, it was contended that disclosure to the Stock Exchange was made and supporting documents will be filed by July 10, 2015.

Adjudication Order in respect of Maharashtra Polybutenes Ltd. in the matter of Maharashtra Polybutenes Ltd. Page 4 of 20 by whatever name called. As per Regulation 31(1) of SAST Regulations, 2011 the promoter of every target company shall disclose details of shares in such target company encumbered by him or by persons acting in concert with him in such form as may be specified. Thus, a company has to report to the stock exchange not only a pledge created through a depository but also a pledge or encumbrance created otherwise. The shares were transferred with an intention to create an encumbrance or pledge on the shares so transferred. So, the promoters and company have rightly disclosed the shareholding pattern so that the investors can take an informed decision. d. During the investigation period, until May 25, 2009, the company was under the purview of BIFR and Section 22(1) of SICA was applicable. Therefore, SEBI must have obtained consent of BIFR before carrying out any such investigation for the period. e. It was agreed upon and understood between the financiers and the promoters that the transfer of shares for raising loans is merely a transaction of pledge by way of transfer and such transfer of shares cannot be construed as sale. It was agreed upon and understood between the financiers and the promoters that the financiers will keep such transferred shares in their custody in good faith and will not re-pledge or sale or transfer such shares. f. Shares so transferred

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Source: SecMarx — sebi:EAD-5/SVKM/DS/AO/91/2017-18. 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.