Penalty for non-compliance of Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

SEBI had  issued  various Circulars from time to time, specifying the uniform structure for imposing fines for non-compliance with certain  provisions  of  the  Listing  Regulations  and the Standard  Operating Procedure for suspension  of   trading in case the   non-compliance is continuing and/or repetitive. However, there is no specific provision under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for imposing penalty for non-compliance of Regulation 30 of the said Regulations.

Penalty

What is the consequence, if a listed entity has not made the appropriate disclosure of any events or information, which is material, within the prescribed time of twenty four hours from the occurrence of event or information?

Here we will discuss, the Case Laws where a listed entity has not made appropriate disclosure of any events or information which is material or made delayed disclosure under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

SETTLEMENT ORDER IN RESPECT OF PC JEWELLER LIMITED

PC Jeweller Limited (hereinafter referred to as ‘PCJ’) is a company having its shares listed on Bombay Stock Exchange Ltd. (‘BSE’) and National Stock Exchange of India Ltd. (‘NSE’). During examination in respect of compliance obligations of PCJ with respect to its proposed buy-back offer, Securities and Exchange Board of India (“SEBI”) observed that PCJ had not disclosed the objection raised by SBI vide letters dated July 07, 2018 and July 12, 2018 for its proposed buy-back offer and on July 13, 2018, it had disclosed to BSE and NSE that in view of the non-receipt of the requisite NoC from SBI, its board of directors had decided to withdraw the buy-back offer. SEBI has found that non- disclosure of SBI’s objections by PCJ is a material information and required to be disclosed to the stock exchanges as prescribed under the regulation 30(1), 30(4)(i) and 30(7) of the LODR Regulations.

In view of the above, it was decided to inquire into and adjudicate upon the alleged violations as aforesaid and Adjudicating Officer was appointed under Section 23-I of Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as the ‘SCRA’) and Rule 3 of Securities Contracts (Regulation) (Procedure for Holding Inquiry and imposing penalties by Adjudicating Officer) Rules, 2005, to inquire into and adjudge under Section 23E of the SCRA the aforesaid alleged violations by PCJ.

PCJ had a meeting with the Internal Committee of SEBI on August 19, 2019, wherein the settlement terms were deliberated. Thereafter, PCJ, vide its letter dated August 22, 2019, proposed payment of 19,12,500/- (Rupees Ninteen Lakh Twelve Thousand and Five Hundred Only) towards full and final settlement of alleged default contained in the SCN.

Pursuant to the same, PCJ, vide its e-mail dated October 22, 2019 informed SEBI that on October 21, 2019 it has remitted a sum of 19,12,500/- towards the settlement charges.

ADJUDICATION ORDER IN THE MATTER OF D S KULKARNI DEVELOPERS LTD.

Pursuant to examination, it was observed by SEBI that there were various instances where D S Kulkarni Developers Ltd (herein after referred to as “DSKDL”) had either failed to disclose or made delayed disclosure of material information related to defaults on loans to banks and financial institutions, revisions in rating as well as regulatory actions taken by various authorities against it to the exchanges. Further, it is also observed that the DSKDL has failed to respond to the queries raised by BSE with respect to certain articles appearing in the media. Therefore, it was alleged that the DSKDL has violated the following provisions of law: Regulation 30(1), Regulation 30(2), Regulation 30(6), and Regulation 30(10) of LODR Regulations read with clause 6 of Para A of Part A of Schedule III of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as LODR Regulations) and clause 6 of Para A of Annexure I to the SEBI circular CIR/CFD/CMD/4/2015 dated September 09, 2015 (hereinafter referred to as SEBI Circular); read with Regulation 4(1)(h), (i), (j) and 4(2)(b), (e) of LODR Regulations.

Accordingly, adjudication proceedings have been initiated against the DSKDL under Section 23A(a) and Section 23E of Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as SCRA).

After taking into consideration Adjudication Officer (AO) in exercise of its powers conferred under Section 23-I of the SCRA read with Rule 5 of the Adjudication Rules, imposed a penalty of Rs. 10,00,000/- (Rs. Ten Lakh only) under Sections 23A(a) and 23E of SCRA on DSKDL for its violations of provisions of law mentioned in the pre-paragraphs. DSKDL directed to remit / pay the said amount of penalty within 45 days of receipt of this order through online payment facility available on the website of SEBI.

ADJUDICATION ORDER IN THE MATTER OF FIVE CORE ELECTRONICS LIMITED (FCEL)

SEBI, upon certain complaints against Five Core Electronics Limited (FCEL) and analysis of the facts of the case on the basis of information available on record, observed that:

A. FCEL Failed to make announcements on the exchange website in line with Regulation 30 of LODR Regulations;

i. As stated by NSE in its report, the company has conducted its Board meeting on April 27, 2019. However, no information on the outcome of the said meeting was filed with the exchange.

ii. It was also highlighted by NSE that the CFO, CS & CO and independent directors – Mr. Neeraj Sharma and Mr. Aditya Agarwal have claimed to have tendered their resignation. However, no such information was filed with the exchange

iii. NSE has also noted that no announcements have been made by the company since April 27, 2019. The company has made no announcement intimating delay in submission of financial results thereafter as per SEBI Circular dated November 19, 2018.

iv. In view of the above, it appears that the company has violated the provisions of Regulation 30 of the LODR Regulations and SEBI Circular dated November 19, 2018

B. Non-compliance with other provisions of the LODR Regulations:

C. Mis-utilization of funds and Intent to defraud the investors:

In view of the foregoing, in order to protect the interest of investors and the integrity of the securities market, I, in exercise of the powers conferred upon me under Section 19 read with Sections 11, 11(4) and 11B of the SEBI Act, 1992, hereby issue the following directions:

i. The Company, its promoters/promoter group entities and/or the non-independent directors (“The Noticee”) are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further orders.

ii. The Noticee are restrained from being associated with any intermediary registered with SEBI or any listed entity or its material unlisted subsidiary, till further orders.

iii. The Noticee, are restrained from disposing, selling or alienating, in any other manner, their assets or divert funds, till further orders.

iv. NSE shall appoint an independent Auditor/ Audit Firm for conducting a detailed forensic audit of the books of accounts of the company to confirm mis-utilization of IPO proceeds by the company. Such appointment of forensic auditor shall be done within 30 days of this order.

v. The Noticee shall extend necessary co–operation to the independent Auditor/Audit Firms appointed as per this Order and shall furnish all information/documents sought from them from time to time.

vi. The independent Auditor/ Audit Firm so appointed as per this Order shall submit a Report to SEBI through NSE within 3 months of date of its appointment.

 CONCLUSION

In the absence of specific penal provisions for non-compliance of Regulation 30 of SEBI (LODR) Regulations, 2015 and after reading the above Orders passed by the Adjudicating Officer, SEBI, it is clear that if a listed entity has not made appropriate disclosure of any event or information which is material or made a delayed disclosure under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 then the said listed entity has to face legal consequences and SEBI may appoint an Adjudicating Officer under Section 23-I of SCRA, 1956 and Rule 3 of Securities Contracts (Regulation) (Procedure for Holding Inquiry and imposing penalties by Adjudicating Officer) for holding inquiry and imposing penalties.

Tags:

Author Bio

More Under SEBI

2 Comments

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2020
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031