sebi:Order/SM/PP/2018-19/1066-1067
Facts / Headnote
Penalty imposed on both Noticees for failure to make timely disclosures under Regulation 31(1) r/w 31(3) of SAST Regulations, 2011
Provisions invoked
- s. 15A
- s. 15
- s. 15J
Regulations relied on
- SEBI (SAST) Regulations, 2011 — 31(1)
Parties
- Mr. K. C. Palanisamy
- Mr. K C P Sivaraman
Holding
The Noticees violated Regulation 31(1) r/w Regulation 31(3) of the SAST Regulations, 2011 by failing to disclose the creation of pledges of shares to BSE and the company within seven working days, and are liable for monetary penalty under Section 15A(b) of the SEBI Act. A penalty of Rs. 2,00,000/- was imposed on each Noticee.
Full text
Page 2 of 11 during the quarter ended March 2015 was Rs. 1,125 lakhs (represented by 1,12,50,000 shares). 3. Pursuant to the receipt of the Notice of Approved Enforcement Action dated September 27, 2016 from the Enforcement Department ( EFD- SEBI), the Noticees filed a settlement application under SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 to settle the alleged default committed by the Noticees w.r.t non-compliance with the disclosure requirements specified under Regulations 31(1) r/w 31(3) of SAST Regulations, 2011. The settlement applications filed by the Noticees were rejected by the High Powered Advisory Committee (HPAC) on November 14, 2017 as the Noticees failed to appear before the Internal Committee on consent ( IC) on the stipulated date of the IC meeting. The same was also communicated to the Noticees by SEBI vide letter dated November 24, 2017.
Page 3 of 11 Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as 'Adjudication Rules') to inquire into and adjudge under the provisions of Section 15A(b) of the SEBI Act, the alleged violation of the aforementioned provisions of the SAST Regulations by the Noticees. SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
Page 4 of 11 (ii) Regulation 31 (1) of SEBI (SAST) Regulations, 2011, stipulates that promoter of every target company shall disclose details of the shares in such target company encumbered by him or by persons acting in concert with him in such form as may be specified. Further, Regulation 31 (3) of SEBI (SAST) Regulations, 2011, requires the reporting of such encumbered shares within seven working days from the creation or invocation or release of pledge/ encumbrance, as the case may be to, (a) every stock exchange where the shares of the target company are listed; and (b) the target company at its registered office. (iii) BSE, vide its email dated July 08, 2015, had stated that it has not received any disclosures under Regulation 31 of SAST Regulations. Further, the company vide e-mail dated July 23, 2015 submitted that since there is no purchase or sale of shares by the promoter or PAC, no disclosures were received by it under Regulation 31 of SAST Regulations.Therefore, it was alleged that the Noticees failed to make the disclosures to BSE and to the company as required under Regulation 31(1) r/w Regulation 31(3) of SEBI (SAST) Regulations, 2011, with regard to increase in the number of pledged shares, as mentioned in the above table during the quarter ended March 31, 2015.
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