sebi:WTM/KMA/IVD/411/07/2011
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Facts / Headnote
Show cause notices disposed of without any directions
Provisions invoked
- s. 19
Regulations
- Reg. 11
- Reg. 6(a)
Parties
- Mr. Ashish P Shah
- Mr. Anil Kantilal Shah
Holding
The show cause notices dated April 20, 2005 issued to Mr. Ashish P Shah and Mr. Anil Kantilal Shah in the matter of Accurate Exports Limited were disposed of without any directions, as SEBI was unable to establish the charge of violating Regulation 6(a) of the PFUTP Regulations against them.
Full text
Page 2 of 6 Company had issued 2 different notices dated April 3, 2001 signed by the Managing Director, Mr. Dinesh Sharma, calling for an Extra-Ordinary General Meeting (EGM) on April 30, 2001. The following proposals were made in the first notice: i. An increase in authorised capital from `25 crores to `156 crores, divided into 15.60 crore equity shares of `10 each ii. To issue 15.60 crore preferential shares on a swap basis in proportion to 10 shares of the Company for every one share held by the shareholders of Sanidhya Holiday Resorts and Estate Developers Limited and Tissue and Floritac India Limited. iii. Resolution to invest in the equity shares of Sanidhya Holiday Resorts and Estate Developers Limited and Tissue and Floritac India Limited on swap basis to acquire total shareholding in the said companies and iv. Shifting of registered office of the Company from Ahmedabad to Vadodara. The proposals of the second notice are: i. Increase in authorised capital from `25.00 crores to `81.00 crores, divided into 8.10 crore equity shares of `10 each ii. To issue 6 crore preferential shares on a swap basis in proportion to 10 shares of the Company for every one share held by the shareholders of Sanidhya Holiday Resorts and Estate Developers Limited iii. Resolution to invest in the equity shares of Sanidhya Holiday Resorts and Estate Developers Limited on swap basis to acquire total shareholding in the said Company
Page 3 of 6 ASE informing that the said allotments were null and void as various regulatory compliances under the SEBI Act and the Companies Act 1956 had not been met. However, substantial quantity of shares had been dematerialised and transferred to various entities during the period between the preferential allotment and the application for listing. The shares issued by the Company were subsequently dematerialized and transferred the same to certain other entities and they in turn, transferred the shares to other set of entities including Mr. Anil K. Shah (Proprietor – A. K. Investments) and Mr. Ashish P. Shah who offloaded the same in the market, without the shares being listed on the stock exchange. Thus, it was alleged that Mr. Anil K. Shah and Mr. Ashish P. Shah had violated Regulation 6(a) of the PFUTP Regulations and hence the notices. Since no reply was received from Mr. Ashish P Shah, a reminder was sent to him asking him to reply to the show cause notice. However, no reply was received from him till date. He had also failed to avail the opportunities of hearing given to him. Though, no reply was received from Mr. Anil K Shah, he appeared in a hearing before me. During the personal hearing, Mr. Anil K Shah was advised to submit his demat account statement for the relevant period. However, he has failed to furnish the same till date. The proceedings were kept pending for the conclusion of all other similar proceedings initiated by SEBI against various other entities.
Page 4 of 6 notice has mentioned that “As a client you are found to have traded through the brokers M/s Parklight Investemnts, M/s P. Surayakant Share & Stock Brokers and M/s Equisearch Broking, purchasing 5,81,000 and selling 62,75,025 shares of AEL. The transaction details of the client, Ashish P Shah are shown in the following table:” The details of the transactions of Mr. Ashish P. Shah executed through the three stock brokers were mentioned in the notice. It was further mentioned in the notice “From your statement dated March 05, 2004 before SEBI, it was observed that you are said to have acted as a sub-broker for various clients, namely, Anil Shah, Rajesh C Talsania and Nrupresh C Shah through various brokers.” No submissions were made in this regard. In the notice to Mr. Ashish P. Shah, it was alleged that he had acted as a sub broker for various clients including Mr. Nrupesh C. Shah. SEBI had initiated proceedings against Mr. Nrupesh C. Shah. In the notice (dated April 25, 2005) that was issued to Mr. Nrupesh C. Shah, it was inter alia alleged “….You were an employee of the member broker M/s Rajesh N Jhaveri and traded on behalf of its clients Ashish P Shah and Anil K Shah through the sub-broker M/s Rajesh N Jhaveri. You had received shares from Ashish P Shah and Anil K Shah in lieu of the loan taken from you and then sold them in the market”. The said proceeding was disposed of by SEBI, vide Order dated January 14, 2009 and held that the violation of Regulation 6(a)
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Source: SecMarx — sebi:WTM/KMA/IVD/411/07/2011. 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.