sebi:SD/AO/20/2010
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Facts / Headnote
Noticee found guilty of violating Takeover Regulations and IT Regulations; penalty of Rs. 1,50,000 imposed under Section 15A(b) of the SEBI Act, 1992
Provisions invoked
- s. 15A
- s. 15
- s. 15J
Regulations
- Reg. 7
- Reg. 4
- Reg. 7(1)
- Reg. 6
- Reg. 13
- Reg. 11
- Reg. 10
- Reg. 8
- Reg. 13(5)
- Reg. 7(2)
- Reg. 103
Parties
- M/s. Right Finstock Private Limited
Holding
The Noticee, M/s. Right Finstock Private Limited, was found guilty of violating Regulations 7(1), 7(1A), 7(2), 8(1) and 10 of the Takeover Regulations, 1997 and Regulations 13(1), 13(3) and 13(5) of the IT Regulations, 1992 by failing to make required disclosures regarding purchase of 30.60 lakh shares (23.16% of paid-up capital) and sale of 10 lakh shares (7.57% of paid-up capital) of KCBFL. A penalty of Rs. 1,50,000 was imposed under Section 15A(b) of the SEBI Act, 1992.
Full text
Page 2 of 8 various off-market transactions during March 2004. Thus BSE had referred its snap investigation report to SEBI in order to examine violations, if any of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the said “Takeover Regulations”) and SEBI (Insider Trading) Regulations, 1992 (hereinafter referred to as the ‘IT Regulations’) by Right Finstock Private Limited as the Exchange did not receive any disclosure with regard to variations of holding of more than 2% for Right Finstock Private Limited. The scrip of KCBFL is listed on the Ahmedabad Stock Exchange and Bombay Stock Exchange (hereinafter referred to as ‘ASE and BSE respectively’). However, no trading has been observed in the scrip on ASE.
Page 3 of 8 that the disclosures referred to in sub-regulation (1) shall be made within two working days of the acquisition of shares or voting rights, as the case may be. However, the Noticee had allegedly failed to disclose the said purchase of 30.60 lakh shares amounting to 23.16% of the paid up capital of KCBFL which exceeded 14% of the paid up capital of KCBFL, as stipulated in the said Takeover Regulations and thereby allegedly violated Regulation 7 (1) & 7 (2) of the Takeover Regulations. Further, as per Regulation 103 of the Takeover Regulations public announcement needs to be made by the acquirer in order to acquire 15% or more of shares or voting rights of the company. Furthermore, as per Regulation 8 (1)4 of the Takeover Regulations, any person holding more than15% shares or voting rights in any company shall make yearly disclosures to the company within 21 days from the financial year ending. Likewise, the Noticee had allegedly failed to make disclosure as regards the sale of 10 lakh shares which amounts to 7.57% of the paid up capital of KCBFL under Regulation 7(1A)5 read with Regulation 7(2) of the Takeover Regulations.
Page 4 of 8 5. SEBI has initiated adjudication proceedings under Section 15A (b) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’) to inquire into the alleged violation of Regulations 7(1), 7 (1A), 7(2), 8(1) and 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and Regulations 13 (1), 13 (3) and 13 (5) of SEBI (Prohibition of Insider Trading) Regulations, 1992 against the Noticee on account of its failure to make necessary disclosures as stipulated under the said Takeover and IT Regulations.
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Source: SecMarx — sebi:SD/AO/20/2010. 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.