sebi:WTM/GA/99/MIRSD/11/06

SEBI · SEBI · 2003-09-19 · G. ANANTHARAMAN, WHOLE TIME MEMBER

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Facts / Headnote

Minor penalty of censure imposed on the noticee merchant banker

Regulations

• Reg. 13(4)
• Reg. 13
• Reg. 3
• Reg. 4
• Reg. 10
• Reg. 11(2)
• Reg. 2
• Reg. 13(2)
• Reg. 13r

Parties

• M/s. Meghraj SP Corporate Finance (Private) Limited {formerly known as Meghraj Financial Services (India) Pvt. Ltd.}, Merchant Banker, Registration No. INM 000001220

Holding

The Merchant Banker failed to exercise due care and diligence as contemplated under regulation 13 read with Schedule III of the SEBI (Merchant Bankers) Regulations, 1992, by failing to advise the acquirers to make a public announcement under the Delisting Guidelines and by failing to promptly communicate SEBI's advice of September 19, 2003 to the acquirers. A minor penalty of censure was imposed instead of the one-month debarment recommended by the Enquiry Officer.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ ORDER UNDER SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) REGULATIONS, 2002 AGIANT M/S. MEGHRAJ SP CORPORATE FINANCE (PRIVATE) LIMITED {FORMERLY KNOWN AS MEGHRAJ FINANCIAL SERVICES (INDIA) PVT LTD}, MERCHANT BANKER HAVING REGISTRATION NO. INM 000001220

(INDIA) PVT LTD}, MERCHANT BANKER HAVING REGISTRATION NO. INM 000001220 Date of Hearing: September 05, 2006 Appearances : For noticee : Shri. M.P. Rao and Ms N.S Nappinar Advocates, Shri Rajan Satija and Shri Aziz Mutvalli For Securities and Exchange Board of India: Shri P K Kuriachan, General Manager. 1.0 BACKGROUND 1.1 The facts giving rise to the present proceedings in brief are stated below. A public announcement under regulation 11(2) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations) was made on August 21, 2003 by Andavar Investments Pvt Ltd, Subramanian Investments Pvt. Ltd, Valliammai Investments Pvt. Ltd. and Ramanathan Investments Pvt. Ltd. (hereinafter collectively referred to as the acquirers) to acquire 7,42,560 equity shares of SRP Tools Ltd. (hereinafter referred to as the target company). The shares of the target company were listed on the Madras Stock Exchange Ltd. (hereinafter referred to as MSE). The acquirers were part of the promoter group of the target company and together with persons acting in concert, they were holding 74.998% of the paid up equity share capital of the target company at the time of the aforesaid public announcement. The said 7,42,560 equity shares (25.002% of the voting share capital) of the target company had constituted for its entire balance issued paid– up capital.

communicated to the acquirers only on the next working day, i.e on September 22, 2003. As the Merchant Banker was inter alia advised by SEBI to make a fresh announcement in accordance with the provisions of the Delisting Guidelines, it should have informed the acquirers on the same day ( on September 19, 2003), about the ad SEBI. 3.13 The Merchant Banker could not adduce any satisfactory evidence to justify its actions which had prevented its Mumbai Office from directly communicating the advice of SEB acquirers, immediately without any default. The Merchant Banker should have avoided such delay in communicating the advice of SEBI. Failure to take prompt and app action by its Chennai office can not be taken as a plea by the Merchant Banker for escaping its liability. The Merchant Banker failed to function diligently as expected from registered intermediary. The contention of the Merchant Banker that the concerned officer at its Chennai office was not available on September 19, 2003, can not be take excuse from complying with the regulatory requirements in a responsible and timely manner, as stipulated in terms of the said Regulations. It could have deputed or made a any other officer from its Chennai office or could have taken steps to orally communicate the advice of SEBI, considering its importance. The communication of the said advic acquirers in a timely manner was mandatory and the Merchant Banker was expected to comply with the same in its capacity as the manager to the

Source: SecMarx — sebi:WTM/GA/99/MIRSD/11/06. 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.