sebi:WTMO/33/CFD/3/04

SEBI · SEBI · 2002-06-26 · T. M. Nagarajan, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Exemption under Regulation 3(1)(e)(i) denied; violation of Regulation 10 read with Regulations 14(1) and 14(3) found; adjudication proceedings directed to be initiated

Provisions invoked

• s. 11
• s. 15A
• s. 19
• s. 15H

Regulations

• Reg. 7
• Reg. 6
• Reg. 10
• Reg. 12
• Reg. 8
• Reg. 14(1)
• Reg. 44
• Reg. 1
• Reg. 6(1)
• Reg. 8(2)
• Reg. 8(1)
• Reg. 199
• Reg. 200
• Reg. 3
• Reg. 3(1)(e)(i)
• Reg. 45(6)

Parties

• Shri Varinder Gupta
• M/s Mayadevi Polycot Ltd.

Holding

The acquirers were held ineligible for exemption under Regulation 3(1)(e)(i) and to have violated Regulation 10 read with Regulations 14(1) and 14(3) for acquiring 49,88,800 shares (61.97%), while Regulation 12 was held prima facie not violated. Adjudication proceedings were directed to be initiated under Sections 15A(b) and 15H(ii) of the SEBI Act, 1992.

Full text

Home » Enforcement » Orders » Orders of Chairman/Members Enforcement Enforcement▼ In The Matter Of Acquisition Of Shares Of Trident Alco Chem Ltd By Shri Varinder Gupta And M/s Mayadevi Polycot Ltd Mar 31, 2004 | Orders : Orders of Chairman/Members SECURITIES AND EXCHANGE BOARD OF INDIA

(d)       The companies M/s Mayadevi Polycot Ltd., ANG Securities Ltd., Trident Infotech Corporation Ltd. and Abhishek Industries Ltd. have not submitted the statements because their shareholding does not exceed the prescribed limit of 5% of the shareholding of the company at the relevant point of time.  Though these companies have not disclosed their holding being less than the prescribed limit even then the target company was regularly submitting the information to the stock exchanges regarding their shareholding being associated group companies. 6.0       I have taken into consideration the report dated June 26, 2002 filed by the acquirers, the facts and circumstances of the case, the submissions made by the acquirers during the personal hearing granted to them on February 23, 2004 and also the written submissions dated February 24, 2004 submitted by them. 6.1             The issue which arises for consideration is whether the acquirers have complied with the provisions of Regulation 3(1)(e)(i) so as to claim exemption from the provisions of Chapter III of the said Regulations.  Regulation 3(1)(e)(i) as it  stood on date of acquisition by the acquirers i.e. June 08, 2002 provided that nothing contained in Regulations 10, 11 and 12 of these Regulations shall apply to inter se transfer of shares amongst group companies coming under the definition of group as defined in MRTP Act.  Further in respect of the exemption provided under the Regulation 3(1)(e)(i), it was stipulated

complied with the provisions of Regulation 6(1) and 6(2) for the year 1997 and Regulation 8(1) and 8(2) for the years 1998, 1999 and 2000. Another transferor i.e. Abhishek Industries Ltd had also not complied with Regulation 6(1) and 6(2) for the year 1997 and Regulation 8(1) and 8(2) for the years 1998, 1999, 2000 and 2001. 2.0 The above conditions which would entitle the acquirers to claim exemption under the provisions of Regulation 3(1)(e)(i) of the said Regulations did not appear to have been complied by the transferor and the transferee (the acquirers). The acquisition made by the acquirers without complying with the requirements of the provisions of the Regulations was, prima facie found to be in violation of the provisions of Regulations 10 and 12 read with 14 (1) and 14 (3) of the said Regulations. Therefore, a show cause notice dated November 14, 2003 was issued to the acquirers stating interalia that their acquisition of 61.97% shares/voting rights in the aforesaid manner without complying with the requirements of the provisions of the said Regulations, prima-facie, amounted to violation of the provisions of Regulations 10 & 12 read with Regulations 14(1) & 14(3) of the Regulations and therefore the acquirers were liable for penal action under the provisions of the said Regulations and the Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992). Hence the acquirers were directed to show cause as to why one or more or all action(s) under Regulation 44 and

Source: SecMarx — sebi:WTMO/33/CFD/3/04. 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.