sebi:WTM/PS/54/CFD/OCT/2013
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Facts / Headnote
Directions issued restraining the Corporation from passing on corporate benefits to non-public shareholders, restraining directors from holding new positions in listed companies, and directing compliance with rule 19A of SCRR and Clause 40A of the Listing Agreement; order treated as show cause notice with 21 days to respond.
Provisions invoked
- s. 19
- s. 21
- s. 12A
Parties
- Haryana Financial Corporation Limited
- Board of Directors of Haryana Financial Corporation Limited
Holding
The Corporation, a listed public sector company, failed to comply with the minimum public shareholding (MPS) requirement of at least 10% under rule 19A of the SCRR by the due date of August 08, 2013, and directions were issued against the Corporation and its Board of Directors to remedy the non-compliance.
Full text
Page 2 of 6 the manner specified by the Securities and Exchange Board of India, within a period of three years from the date of such commencement; (b) whose public shareholding reduces below ten per cent, after the date of commencement of the Securities Contracts (Regulation) (Second Amendment) Rules, 2010 shall increase its public shareholding to at least ten per cent, in the manner specified by the Securities and Exchange Board of India, within a period of twelve months from the date of such reduction."
Page 3 of 6 engage with the Corporation in order to provide clarifications, if any, and to elicit plan of action by the Corporation for meeting the MPS norms. In this regard, I note that SEBI had written letters dated February 18, 2013, April 02, 2013 and April 05, 2013 to the Corporation/its Chairman. However, the Corporation vide letters dated April 08, 2013, April 09, 2013 and April 29, 2013 inter alia submitted that it is not in a position to increase the public shareholding and requested SEBI to exempt it from the MPS requirements. The Corporation further submitted that it has also prepared an action plan to wind up its affairs. In response, SEBI vide letter dated July 23, 2013 had informed the Corporation that the amendments to the SCRR were done with a view that a dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. The Corporation was informed that in terms of rules 19(2) and 19A of the SCRR, those listed public sector companies whose public shareholding was below 10%, should raise the same to the minimum level by August 08, 2013. The Company was further put to notice that in case of failure to comply with the MPS requirement within the stipulated timeline prescribed under the SCRR, SEBI may consider undertaking appropriate proceedings or action, under law, as mentioned therein. The Corporation was also specifically informed that its request for
Page 4 of 6 the scope for price manipulation." Further, the availability of a minimum portion/number of shares (floating stock) of the listed securities with the public ensures that there is a reasonable depth in the market and the prices of the securities are not susceptible to manipulation.
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Source: SecMarx — sebi:WTM/PS/54/CFD/OCT/2013. 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.