sebi:WTM/RKA/ISD/30/2016
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Facts / Headnote
Interim order dated November 20, 2014 continued in force; application for revocation/modification rejected
Provisions invoked
- s. 11B
- s. 11
- s. 11(4)
- s. 19
- s. 12A
Regulations
- Reg. 3
- Reg. 4
- Reg. 2(1)(c)
- Reg. 4(1)
- Reg. 9
- Reg. 10
- Reg. 12
- Reg. 4(2)
- Reg. 3(a)
- Reg. 3(c)
- Reg. 4(1)(f)
- Reg. 11a
Parties
- Transgene Biotek Limited
- Promoters/Directors of Transgene Biotek Limited (including Dr. K. Koteswara Rao, CMD)
Holding
The Whole Time Member of SEBI rejected the noticees' application to revoke or modify the ex-parte interim order dated November 20, 2014, holding that a prima facie case existed that Transgene and its Promoters/Directors were in complicity with other entities in transferring GDR proceeds without receiving the agreed technology and concealing price-sensitive information from shareholders. The interim directions were continued in force pending completion of investigation.
Full text
Order in the matter of Transgene Biotek Limited Page 2 of 19 expansion of its present business activities. d) There was a price rise from ₹ 44.65 per share to ₹ 52.25 per share during the period February 17, 2011 to February 22, 2011 (i.e., the period post announcement of first GDR issue). Similarly, there was a sharp price rise from ₹ 30.30 per share to ₹ 57.65 per share during the period September 30, 2011 to November 15, 2011 (i.e., the period post announcement of second GDR issue). e) It was observed that from the GDR proceeds of first issue (i.e. US$23 million), US$17 million were transferred to Asia First Technologies Ltd., Hong Kong (hereinafter referred to as ‘AFTL’) and US$4.5 million were transferred to SyMetric Sciences Inc., Canada (hereinafter referred to as ‘SyMetric'). Further, from the GDR proceeds of second issue (i.e. US$17.5 million), US$12.92 million were transferred to AFTL and US$4 million were transferred to entity named Sristek. f) It was prima facie observed that the GDR proceeds as described above were transferred by Transgene, directly or indirectly, through subsidiary for purposes other than informed to the shareholders. Also, Transgene and its directors had deliberately shown a rosy picture to the investors in Indian securities market by making GDR issues and then making false and misleading disclosures about the utilization of the GDR proceeds. Further, prima facie, they actively concealed the fact that the Transgene had never received the techno
Order in the matter of Transgene Biotek Limited Page 3 of 19 regulations 3(a), (c) and (d) read with 4(1) and 4(2)(f) of the SEBI (Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations") as well as section 12A (b) and (c) of SEBI Act, 1992
Order in the matter of Transgene Biotek Limited Page 4 of 19 order are inter alia as under: a) Regulation 10 of the PFUTP Regulations specifically provides for granting a reasonable opportunity of being heard before issuing necessary directions or taking appropriate action in accordance with the regulations. In the instant case, the above due procedure established in the PFUTP Regulations has been blatantly violated as no reasonable opportunity of hearing was given to the company and its Director/Promoters, in consonance with the principles of natural justice before passing the interim order.
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Source: SecMarx — sebi:WTM/RKA/ISD/30/2016. 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.