sebi:WTM/TCN/48/IVD/08/07
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Direction prohibiting D-Link India Ltd. from buying, selling or dealing in securities for a period of one month
Provisions invoked
- s. 11B
- s. 11
- s. 11(4)
- s. 19
- s. 11(1)
- s. 77A
- s. 217
- s. 621(1)
Regulations
- Reg. 11
- Reg. 5
- Reg. 5(1)(a)
Parties
- D-Link India Ltd.
- Shri K. R. Naik
Holding
D-Link India Ltd. was found to have disseminated misleading information to the public in violation of Regulation 5(1)(a) of the PFUTP Regulations, 1995, by passing a special resolution authorizing a buy-back without any intention to implement it, and was directed not to buy, sell or deal in securities for one month.
Full text
Page 2 of 12 volume varying between 76,000 shares and 4.5 lakh shares. At NSE, the price rose from Rs 107.60 to Rs.189.60 with volume varying between 88,000 shares and 17 lakh shares.
Page 3 of 12 companies Act, in this regard was taken by the company. It was observed that the share price at the time of EGM was around Rs.63 and thereafter it came down to Rs.41.55 on April 23, 2003. Subsequently, the price went to a high of Rs. 106.25 on October 1, 2003. Thus, small investors who had purchased the shares in anticipation of the buy back had to sell the shares at a loss since the buy back offer was never made.
Page 4 of 12 intimation regarding the same to stock exchanges did not amount to “dissemination” as contemplated under PFUTP Regulations, 1995. (ii) At the EGM, the shareholders of DIL passed a resolution authorizing the BoDs to buy-back the shares. The said special resolution did not impose an obligation on the Board to buy-back its shares. The notice of EGM revealed that the proposed resolution was meant inter alia only to empower and authorise the Board of Directors to buy-back, if they thought fit. Therefore the resolution only conferred a power of authority to the BoDs to buy back could be said to have been imposed an obligation on the Board of Directors of DIL to buy-back.
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Source: SecMarx — sebi:WTM/TCN/48/IVD/08/07. 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.