sebi:Order/SBM/AK/2022-23/17255-17260

SEBI · SEBI · 2016-05-22 · Suresh B Menon, Adjudicating Officer

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Facts / Headnote

Penalty imposed on all six Noticees for insider trading in the scrip of ADF Foods Limited; Rs. 40,00,000 imposed jointly and severally on Noticees 1-5, and penalty imposed on Noticee No. 6 under Section 15G of the SEBI Act.

Provisions invoked

• s. 15
• s. 19
• s. 12A
• s. 15G
• s. 15J
• s. 28A
• s. 68
• s. 114

Regulations

• Reg. 5
• Reg. 2
• Reg. 3
• Reg. 4
• Reg. 4(1)
• Reg. 2(1)(d)
• Reg. 2(1)
• Reg. 3(1)
• Reg. 2(1)(g)(i)
• Reg. 4(2)

Parties

• Ms. Pallavi Navinchandra Mehta (Noticee No. 1)
• Ms. Shefali Bhupendra Mehta (Noticee No. 2)
• Shri Navin Mansukhlal Mehta (Noticee No. 3)
• Shri Abhishek Mehta (Noticee No. 4)
• Ms. Priyanka Thakkar (Noticee No. 5)
• Shri Bhavesh R Thakkar (Noticee No. 6)

Holding

All six Noticees were held liable for insider trading in ADF Foods Limited shares during the UPSI period (May 21, 2016 to July 27, 2016) relating to the proposed buyback of shares. A penalty of Rs. 40,00,000 was imposed jointly and severally on Noticees 1-5, and a penalty was imposed on Noticee No. 6 (the insider who communicated the UPSI).

Full text

Adjudication order in the matter of ADF Foods Limited Page 2 of 70 or payment of dividend or a combination thereof. The proposal with respect to buyback was first mooted in the aforesaid meeting. ii. On May 22, 2016, Motilal Oswal gave a presentation on the buyback of shares, highlighting the pros and cons of buyback of shares, as a merchant banker. iii. On May 23, 2016, the Company Secretary of the Company was communicated to initiate preparations for the proposal to undertake buyback of shares. The stock exchanges were intimated that the board of directors of the Company will consider the proposals for announcement of dividend or buyback of shares, or a combination thereof, in its meeting to be held on May 27, 2016. The agenda papers pertaining to the proposals for announcement of dividend or buyback of shares, or a combination thereof, to be discussed at the board meeting to be held on May 27, 2016 were sent to the directors. iv. On May 27, 2016, The board of directors of the Company deferred the decision on proposals for announcement of dividend or buyback of shares till next board meeting citing requirement of more time. v. On July 14, 2016, in preparation for the meeting of the board of directors of ADF on July 27, 2016, Motilal Oswal was approached in order to reconsider the proposed buyback of shares. vi. On July 15, 2016, Motilal Oswal gave financial details of buyback including the pricing of the issue to the Company Secretary vii. On July 19, 2016, the agenda paper

Adjudication order in the matter of ADF Foods Limited Page 3 of 70 to as ‘PIT Regulations’) as the buyback would result in change in capital structure of the company. In this regard, it is observed that the information relating to buyback of shares of ADF was first discussed on May 21, 2016, and the same finally culminated into a decision of buyback of shares in the scrip of ADF on July 27, 2016 post the Board of Directors meeting of the company on July 27, 2016. It is noted that the said UPSI on the buyback of shares was disseminated to the stock exchanges pursuant to the board meeting of ADF held on July 27,

Adjudication order in the matter of ADF Foods Limited Page 4 of 70 Shri Abhishek Mehta (‘Noticee No. 4’ / ‘Mr. Abhishek’) Section 12A(d) & (e) of SEBI Act and Regulation 4(1) of PIT Regulations, 2015 Ms. Priyanka Thakkar (‘Noticee No. 5’ / ‘Ms. Priyanka’) Section 12A(d) of SEBI Act and Regulation 4(1) of PIT Regulations, 2015 Shri Bhavesh R Thakkar (‘Noticee No. 6’ / ‘Mr. Bhavesh’) Section 12A(d) & (e) of SEBI Act, Regulation 3(1) and Regulation 4(1) of SEBI (PIT) Regulations, 2015.

Source: SecMarx — sebi:Order/SBM/AK/2022-23/17255-17260. 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.