sebi:WTM/GA/157/MIRSD/3/07

SEBI · SEBI · 2000-09-05 · G. ANANTHARAMAN, WHOLE TIME MEMBER

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Facts / Headnote

Minor penalty of censure imposed on certificate of registration

Regulations

• Reg. 13(4)
• Reg. 13
• Reg. 5(1)
• Reg. 13(1)
• Reg. 3
• Reg. 22
• Reg. 24(4)
• Reg. 24
• Reg. 13(2)
• Reg. 22(2)
• Reg. 15(3)

Parties

• HSBC Securities & Capital Markets (India) Private Limited

Holding

HSBC Securities & Capital Markets (India) Ltd., as manager to the offer for Saptarishi Agro Industries Ltd., violated Clauses 1, 2 and 7 of the Code of Conduct for Merchant Bankers and Regulation 24(4) of the Takeover Regulations by failing to disclose unlisted shares in the letter of offer dated September 15, 2000, and a minor penalty of censure was imposed on its certificate of registration.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER REGULATION 13(4) OF SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING

3.2 The Merchant Banker submitted its reply vide letter dated October 12, 2004 and inter alia submitted that there was no violation on its part to comply with the obligations specifie the Takeover Regulations and that it had exercised due care in the conduct of its activities as a merchant banker. It was further contended that though the allegations levele show cause notice dated March 18, 2004 were only Clauses 1,2,7 and 9 of the Code of the Conduct specified under the said Regulations, in the Enquiry Report it was held Merchant Banker had violated Clauses 1,2,4,6 and 7 of the Code of Conduct. The Merchant Banker further claimed that the Enquiry Officer had disregarded the submission by it vide letters dated April 01, 2004, May 25, 2004 and May 28, 2004 and also failed to appreciate its relevance. 3.3 The Merchant Banker clarified that, in terms of regulation 22(2) of the Takeover Regulations, it had sent a copy of the draft letter of offer to the target company and also to th exchanges and that a duty was cast upon the target company to review the draft letter of offer and to ensure that the disclosures made therein were factually accura respects. However, the Merchant Banker had not received any communication from the target company in relation to its unlisted shares on the stock exchanges. The M Banker further stated that it had also not received any comments from the stock exchanges in response to the draft letter of offer, despite the fact that one such disclosure relat

9. A merchant banker shall not discriminate amongst its clients, save and except on ethical and commercial considerations. 3.12 In terms of the provisions of the aforesaid Code of Conduct, a merchant banker inter alia has to exercise due care and diligence and maintain high standards of integrity in the of his business. Further, it is the duty of the Merchant Banker to see that the investors are provided with the true and adequate information in a timely manner. In the prese the allegation against the Merchant Banker has been that, in the letter of offer it had failed to mention the details about the unlisted shares of the target company on th exchanges. In the context of the facts and circumstances, it is to be examined as to whether the Merchant Banker had taken proper care as an ordinary prudent man in a situation. 3.13 The Merchant Banker had produced the copy of its letter dated September 05, 2000 addressed to the target company. On a perusal of the copy of the said letter, it appears Merchant Banker had enclosed the draft pubic announcement which had to be made in terms of regulation 15(3) of the Takeover Regulations. The Merchant Banke enclosed the copy of the letter dated May 21, 2004 and the computerized proof of delivery statement received from its courier company, Blue Dart Express Ltd. The sa confirmation of the shipment delivered and indicates one consignment against the name of the target company on September 7, 2000. However, there is no descriptio computerized

Source: SecMarx — sebi:WTM/GA/157/MIRSD/3/07. 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.