sebi:WTM/MPB/ISD/110/2017
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Facts / Headnote
Representation dated September 19, 2017 by VDPL disposed of; actions envisaged in SEBI's letter dated August 7, 2017 modified; trading reverted to pre-August 7, 2017 status with conditions including independent forensic audit and transfer restrictions on promoters/directors.
Provisions invoked
- s. 11B
- s. 11(4)
- s. 19
- s. 11(1)
- s. 188
- s. 204(1)
- s. 153C
Parties
- Venmax Drugs and Pharmaceuticals Limited
Holding
The WTM modified the actions envisaged in SEBI's letter dated August 7, 2017 against VDPL, reverting trading in VDPL securities to the status prior to that letter while directing an independent forensic audit and restricting promoters/directors from transferring their shares (though permitting purchases).
Full text
Order in the matter of Venmax Drugs and Pharmaceuticals Limited Page 2 of 38 reneging on the fiduciary responsibility cast on the board, controlling shareholders and key management person (KMP)
Order in the matter of Venmax Drugs and Pharmaceuticals Limited Page 3 of 38 b. The Notification does not specify the criterion adopted to identify these 331 companies as 'suspected shell companies' and the specific provisions of law pursuant to which such entities have been identified as ‘shell companies'.
Order in the matter of Venmax Drugs and Pharmaceuticals Limited Page 4 of 38 b. There is no criterion or legal provision that defines a 'shell company'. The issuance of the Notification against VENMAX is arbitrary. c. The Notification has been issued in a mechanical and flippant manner despite the list of 'suspected' entities available with SEBI for about two months. d. Without any notice or enquiry, the Notification has been issued overnight with immediate effect substantially curbing the trading of VENMAX scrip. e. The issuance of the Notification has the effect of curbing trading even in genuine scrips such as VENMAX which is contrary to the interest of the shareholders of VENMAX. Such a curb on trading ought to have been effected only after allowing us an opportunity of being heard. Since neither the MCA nor SEBI has provided -any notice prior to the Notification, the same will cause undue hardships and losses to the public shareholders of VENMAX.
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Source: SecMarx — sebi:WTM/MPB/ISD/110/2017. 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.