sebi:WTM/GM/CFD/CMD1/46/2020-21

SEBI · SEBI · 2013-06-04 · G. Mahalingam, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Exemption from MPS norms granted and voluntary delisting permitted subject to conditions; upon delisting, directions in Interim Order read with Confirmatory Order to stand vacated automatically

Provisions invoked

• s. 21A

Regulations

• Reg. 7
• Reg. 22
• Reg. 30(1)
• Reg. 24
• Reg. 31(2)
• Reg. 25A

Holding

SEBI granted Vishva Vishal Engineering Limited, a 100% promoter-held company with nil public shareholding, exemption from MPS norms and permitted it to voluntarily delist from BSE subject to conditions, with interim and confirmatory directions to stand vacated upon delisting.

Full text

Order in the matter of Vishva Vishal Engineering Ltd. Page 2 of 9 (a) Since IPO in the year 1985-86, no further shares have been issued to the public. (b) After the year 1994-95, there was no trading in the shares of the company on the stock exchange. (c) From 1995-96, the paid-up capital of the company consists of 25 Lakh shares of Rs.10 each. There has been no increase in the same since then. (d) In the year 2001, the total public shareholding of 4.44% held by 13 public shareholders was purchased by the promoter group. Since then, (i.e. from the year 2001-02), 100% holding of the company is with the promoters and promoter group companies. (e) Since 19.05.2004, trading in the shares of the company has been suspended by the Stock Exchange (BSE) due to non-compliances of certain provisions of Listing Agreement. (f) Prior to suspension of trading, the scrip was traded for only six days during 1994-95 and it was last traded on 31.12.1994. (g) No investor complaint has ever been filed against the company. (h) SEBI had passed an interim order dated 04.06.2013 (Interim Order) against 105 entities, including the company, for non-compliance of the MPS norms prescribed under Rule 19A of the SCRR. The company came to know about such rule only on receipt of the interim order. Pursuant to the interim order, the company vide letter dated 26.06.2013 had inter alia submitted to SEBI that it wished to opt for delisting. Subsequently, the company had initiated efforts to follow the procedure

Order in the matter of Vishva Vishal Engineering Ltd. Page 3 of 9 passing of the interim order, the company had submitted before SEBI that it was not practically possible for the company to comply with the MPS norms through any of the different methods prescribed by SEBI and that it was desirous of delisting shares from BSE. It had further submitted that it had already initiated the process of delisting and appointed professionals to handle the matter. (i) The company was regularly in communication with BSE for completing pending compliance requirements and filed requisite documents / certificates with it, apart from paying pending Annual listing fees up to FY 2015-16. It is pertinent to note that BSE vide Notice dated 25.10.2019 informed its members that no further action would be taken against certain entities, including the company, which had complied with the requirement of payment of outstanding annual listing fees and would continue to deal in Trade for Trade segment / under suspension. (j) With regard to various methods for complying with the MPS requirements prescribed by SEBI inter alia vide Circular No. CIR/CFD/DIL/10/2010 dated 16.12.2010 and various subsequent amendments, the company submits that it is practically not viable for the company to comply with the MPS norms by any method prescribed by SEBI due to various reasons, such as (i) suspension of trading in the company’s shares since 19.05.2004; (ii) absence of trading in the scrip since 13.12.1994; and (iii)

Order in the matter of Vishva Vishal Engineering Ltd. Page 4 of 9 (l) The MPS norms were introduced in SCRR on 04.06.2010. However, as on 03.06.2010, the promoters’ shareholding in the company was already 100%, which shows that the breach of the MPS norms by the company did not take place subsequent to incorporation of the said norms in SCRR in 2010. (m)The company had declared its intention to delist its shares immediately after the issuance of the interim order and has taken various steps in this regard, post issuance of confirmatory order dated December 2015 (Confirmatory Order) by SEBI. In this regard, as on date, the company has complied with all the pending compliances with BSE, as pointed out by it, barring non-compliance with MPS norms. (n) Considering all the above mentioned facts and circumstances in totality, there is no useful purpose for the company to remain listed. Hence, the promoters of the company may be permitted to voluntarily delist its shares by following the procedure provided under regulation 7 of the Delisting Regulations, without being subjected to penal consequences which apply to compulsory delisting. (o) Since the company has nil public shareholding, the grant of relaxations from SEBI shall not adversely impact the investors’ interest. Consideration

Source: SecMarx — sebi:WTM/GM/CFD/CMD1/46/2020-21. 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.