sebi:WTM/PS/74/CFD/FEB/2015
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Facts / Headnote
Interim order dated June 04, 2013 confirmed against Velan Hotels Limited, its directors, promoters and promoter group for continuous violation of minimum public shareholding requirements; order to remain in force till further directions.
Provisions invoked
- s. 19
- s. 21
- s. 12A
Parties
- Velan Hotels Limited
- directors of Velan Hotels Limited
- promoters of Velan Hotels Limited
- promoter group of Velan Hotels Limited
Holding
SEBI confirmed the directions issued vide its interim order dated June 04, 2013 against Velan Hotels Limited, its directors, promoters and promoter group for failing to maintain the minimum public shareholding of 25% as mandated under rule 19A of the SCRR and Clause 40A of the Listing Agreement read with section 21 of the SCRA.
Full text
Page 2 of 5 (c) The Company was in a bonafide belief that one or the other financial institution would extend equity participation in the expansion projects and thereby it could source the required funds at the same time concomitantly comply with the requirements of Clause 40A (of listing agreement) and the MPS norms. (d) Trading in its shares has been very minimal and share price have also dropped to its lowest since last year (2012). (e) Its expansion projects are underway and would probably be completed by the end of March 2014. The same may take considerable time from there to generate some revenue out of them and thereby increase wealth of the shareholders at large. If only the same happens, new investor/institution will come up in favour of buying its shares. Till such time, it is sceptical about any efforts in this regard. (f) Despite the adverse situation and circumstances, the Company in order to comply with the MPS requirements, is contemplating Offer for Sale (OFS) through stock exchange at an early possible date. It is consulting with few recognised brokers who could undertake the assignment for it. (g) The promoters are keen to comply with the MPS requirements and would sincerely attempt every alternate option that may be suggested.
Page 3 of 5 5. Vide another letter dated July 10, 2013, the Company referred to the proposal made vide letter dated June 8, 2013 and requested SEBI that till such time its proposal is accepted, the sanctions imposed by the interim order be removed. It was also stated that several projects of the Company need to be completed and that such projects are long overdue for commissioning and require the full attention and dedication of the board of directors and top management.
Page 4 of 5 maximum period of twelve months from the date of such fall in the manner specified by the Securities and Exchange Board of India.". Considering the fact that the Company was compliant with the MPS requirements as on June 04, 2010, and became non-compliant subsequently post the allotment of additional shares to the promoters on November 04, 2011, the Company had, at its disposal, a period of twelve months for achieving compliance. This time period expired on November 03, 2012. {i.e., twelve months' period from November 04, 2011 (the date when the public shareholding fell below 25%)}. Admittedly, the Company has not achieved compliance with the MPS requirement compliance till date. Even as per the Shareholding Pattern of the Company for the quarter ended December 2014, as available in the website of BSE, the public shareholding is at 19.85% which is less than the minimum requirement of 25%. Therefore, the Company is in continuous violation of the MPS requirements.
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Source: SecMarx — sebi:WTM/PS/74/CFD/FEB/2015. 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.