sebi:Order/MC/VS/2019-20/5806-5807
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Facts / Headnote
Allegations not established; adjudication proceedings initiated vide SCN dated July 23, 2019 disposed of with no penalty
Provisions invoked
- s. 19
- s. 19G
Regulations
- Reg. 199
- Reg. 201
- Reg. 98
- Reg. 14(A)
- Reg. 14A
- Reg. 78(2)
- Reg. 78
Parties
- Central Depository Services (India) Limited (CDSL)
- National Securities Depository Limited (NSDL)
Holding
The Adjudicating Officer held that CDSL and NSDL did not violate SEBI Circulars dated August 2, 2012 and September 11, 2012 or Clause 1 of the Sixth Schedule read with Regulation 14A of DP Regulations 1996 read with Regulation 98 of DP Regulations 2018, and disposed of the proceedings without penalty.
Full text
Page 2 of 25 Adjudication Order in respect of CDSL and NSDL in the matter of Kyra Landscapes Ltd. (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005 (hereinafter be referred to as the “DP Adjudication Rules”) vide
Page 3 of 25 Adjudication Order in respect of CDSL and NSDL in the matter of Kyra Landscapes Ltd. iii. Since KLL had not filed application for trading approval for the abovementioned equity shares, BSE had not issued trading approval notice for the said 88,55,000 shares, and trading in the securities of KLL had been suspended w.e.f. October 18, 2016. iv. SEBI vide its Circular dated August 02, 2012 read with SEBI Circular dated September 11, 2012 (“the SEBI Circulars”) had inter alia advised the Depositories as follows:- Para. 3 of the Circular dated August 2, 2012 as modified by Circular dated September 11, 2012 - “in order to curtail the transfer of additional issue of shares / securities including by way of further public offerings, rights issue, preferential allotment, bonus issue etc. of the listed company, prior to receipt of final listing / trading approval, the depositories shall devise a mechanism so that such new securities created shall be frozen till the time final listing/ trading permission is granted by the exchange” Para. 4 of the Circular dated August 2 2012,- “the Depositories are advised to allot such additional shares/securities under a new temporary ISIN which shall be kept frozen. Upon receipt of the final listing/ trading permission from the exchange for such additional shares/ securities, the shares/securities credited in the new temporary ISIN shall be debited and the same would get credited in the pre-existing ISIN for the said security. Thereafter,
Page 4 of 25 Adjudication Order in respect of CDSL and NSDL in the matter of Kyra Landscapes Ltd. vii.Despite no intimation being received by the Noticees from the BSE with respect to trading approval for shares allotted on preferential basis on January 11, 2012, the Noticees viz. CDSL and NSDL did not take steps to freeze those shares in terms of the aforesaid SEBI Circulars, and shares were debited from the demat account of the preferential allottees on account of sale on the exchange platform beginning from January 14, 2013, which is after the SEBI Circulars dated August 2, 2012 and September 11, 2012 had become applicable. viii. In view of the above, it was alleged that Noticee No. 1 and Noticee No. 2 failed to implement the SEBI Circular dated September 11, 2012 read with SEBI Circular dated August 02, 2012, by not imposing restrictions on transfer of securities for which no trading approval was given, in alleged violation of the abovementioned SEBI Circulars as well as Clause 1 of the Code of Conduct for Depositories in the Sixth Schedule of the DP Regulations 1996, read with Regulations 14A of DP Regulations 1996 and Regulation 98 of DP Regulations 2018.
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Source: SecMarx — sebi:Order/MC/VS/2019-20/5806-5807. 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.