sebi:Order/AK/RK/2025-26/31950

SEBI · SEBI · 2025-05-05 · Amit Kapoor, Adjudicating Officer

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Facts / Headnote

Penalty of Rs. 1,00,000 imposed under Section 15A(b) of SEBI Act for violation of Regulations 31(1) and 31(2) r/w Regulation 31(3) of SAST Regulations; allegation under Regulation 31(4) r/w 31(5) dropped.

Provisions invoked

• s. 15A
• s. 15
• s. 15J
• s. 23

Regulations

• Reg. 13
• Reg. 31
• Reg. 31(1)
• Reg. 31(2)
• Reg. 31(3)
• Reg. 31(4)
• Reg. 31(5)

Parties

• Lenus Finvest Private Limited

Holding

The Noticee violated Regulations 31(1) and 31(2) r/w Regulation 31(3) of the SAST Regulations for undisclosed 2019-2021 margin pledges/releases, but did not violate Regulation 31(4) r/w 31(5) for the May 09, 2022 pledge, and a penalty of Rs. 1,00,000 under Section 15A(b) of the SEBI Act was imposed.

Full text

Adjudication Order in the matter of Eiko Lifesciences Limited. Page 2 of 11 (“AO”), vide order dated May 05, 2025, to inquire into and adjudge u/s 15A(b) of SEBI Act, the alleged violations committed by the Noticee.

Adjudication Order in the matter of Eiko Lifesciences Limited. Page 3 of 11 proviso: “Provided that the aforesaid disclosure requirement shall not be applicable where such encumbrance is undertaken in a depository.” 6.4 We submit that all the transactions in question being pledges for margin requirements with our stockbroker, SMC Global Securities Ltd. were undertaken entirely within the depository system (NSDL/CDSL) through our Depository Participant. This is the standard, mandated market practice for creating margin pledges on dematerialized shares. 6.5 Since the encumbrances were created, recorded, and released within the depository, they fall squarely within the scope of the proviso. Therefore, based on the express language of the regulation itself, the disclosure requirement was not applicable to any of the alleged transactions 6.6 For transactions prior to the 2022, our interpretation was based on the widespread industry understanding that routine margin pledges were not the subject of Regulation 31, a view later vindicated by the guidance itself. 6.7 At no point did we intend to conceal material information. The transactions were operational, did not involve any third-party financing, and did not impact the beneficial ownership or control of the shares. 6.8 We acted in good faith at all times. There was absolutely no mens rea (guilty intent) to conceal information. Our belief that the transactions were not disclosable was bona fide and reasonable. 6.9 The required annu

Adjudication Order in the matter of Eiko Lifesciences Limited. Page 4 of 11 6.12 Our entire compliance approach is based on the clear distinction between a substantive encumbrance (like a pledge for a loan) and an operational margin pledge. 6.13 The proviso to Regulation 31(2) of the SAST Regulations affirm that routine margin pledges are not the type of event that requires disclosure to the market. 6.14 We formed a bona fide and principled view that if such pledges are not considered material enough for event-based reporting (under SAST), they should not be classified as a disclosable "pledge" in the periodic status report (the shareholding pattern under LODR) either. 6.15 To do otherwise and to not report the event but to report its status would be inconsistent and contradictory. We applied a single, consistent interpretation: a routine margin pledge is not a disclosable encumbrance under the SEBI framework. 6.16 The column for "Pledged Shares" in the quarterly shareholding pattern is intended to provide the market with a clear picture of the promoter's financial leverage and the risk of their shares being invoked by a lender. 6.17 Including transient, operational margin pledges, which can change daily, would introduce significant "noise" and could be actively misleading to investors. It would falsely suggest that the promoter has taken on debt against those shares, which is not the case. 6.18 As we have consistently maintained, the shares were merely transferred to a clien

Source: SecMarx — sebi:Order/AK/RK/2025-26/31950. 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.