sebi:EAD-8/ORDER/KS/AA/2018-19/1560
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Facts / Headnote
Penalty imposed on Noticee for failure to comply with Regulation 4(1) of Buy-Back Regulations
Provisions invoked
- s. 11A
- s. 24
- s. 15
- s. 11(1)
- s. 77
- s. 11
- s. 15H
- s. 13
- s. 32
- s. 77A
- s. 55A
- s. 15J
- s. 15F
- s. 30
- s. 17
- s. 3(3)
- s. 9A
- s. 77A(7)
- s. 15Y
- s. 94
Regulations
- Reg. 4
- Reg. 3
- Reg. 25
- Reg. 8
- Reg. 5
- Reg. 4(2)
- Reg. 29
- Reg. 22
- Reg. 4(1)
- Reg. 19
- Reg. 26
- Reg. 5A
- Reg. 19(1)
- Reg. 19(7)
Parties
- Apollo Tyres Ltd (ATL)
Holding
The Noticee (Apollo Tyres Ltd) failed to comply with Regulation 4(1) of the SEBI (Buy-back of Securities) Regulations, 1998 while effecting the buy-back of its shares, and the said violation attracts penalty under Section 15HB of the SEBI Act.
Full text
Page 2 of 102 Appellate Tribunal (hereinafter referred as ‘SAT’). Hon’ble SAT, vide order dated December 30, 2016, set aside the aforesaid order of the Adjudicating Officer and restored the case to the file of the Adjudicating officer. Thereafter, a fresh adjudication proceeding was initiated by SEBI in the matter.
Page 3 of 102 (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as the “Special Court Act”). The complainants were the notified persons under the Special Court Act. The complaints raised the issue of non-compliance with Section 77A of Companies Act, 1956 and the Buy-Back Regulations relating to buy-back of shares, when the same were bought back by the Noticee in the year 2003. (ii) It was observed that the Hon'ble Special Court vide its order dated August 17, 2000 had approved the scheme of sale of shares framed by the Custodian, wherein shares were divided into 3 categories - (i) Routine Shares, (ii) Bulk Shares and (iii) Controlling Block of Shares. (iii) The aforesaid scheme of sale of shares was affirmed by the Hon'ble Supreme Court of India vide its order dated August 23, 2001 with minor changes. The Hon’ble Supreme Court of India inter alia observed as follows: a) “….In respect of bulk shares, the Special Court has directed that the offer will first be made to the institutional buyers. With the change which has taken place in the financial market, it would be more appropriate that the offer be not restricted only to the institutional buyers and the non-institutional buyers including the Management of the Company may also be offered the sale of such shares of the appellant company….” b) "...If the Court thinks that it is best to adopt the norms laid down by it for sale of controlling block of shares (the 3rd method) then when h
Page 4 of 102 Section 77A of the Companies Act. No other change in the Scheme as formulated by the Special Court is called for..." (iv) In compliance with the aforesaid Order / direction of the Hon'ble Supreme Court of India, the Custodian had drafted the 'terms and conditions' for sale of 54,88,850 shares of ATL which inter alia included the following condition – "...The Custodian will obtain directions of the Hon'ble Court for approval of the offer of the highest bidder so identified by the Disposal Committee. The Hon'ble Special Court after ascertaining the highest offer may give an opportunity to the management of the said Company to buy or to the Company to buy back as per provisions of the Companies Act, 1956, the said “Controlling Block” of shares if it so desires..." (v) The Custodian issued a Public Notice for sale of 54,88,850 shares of ATL that represented 15.1% of the then equity capital of ATL on March 27,
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Source: SecMarx — sebi:EAD-8/ORDER/KS/AA/2018-19/1560. 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.