SEBI Adjudicating Officer has imposed penalty of INR 5 lakhs on Man Industries Ltd, its directors and Chief Compliance Officer for violating SEBI (PIT) Regulations, 2015 and BSEIndia Equity Listing Agreement. The penalty has been imposed by SEBI after 10 years of the delayed disclosure made by the Company.
The SCN, which was issued for the investigation period of 01.06.2010 to 31.07.2011, alleged that Man Industries Ltd had made a delayed disclosure to the exchange about the letter of the BNY Mellon, the depository bank, about its resignation along with termination of Global Depository Receipt (GDR) programme. It was alleged that the disclosure was made after 217 days from the issuance of the letter.
Man Industries Ltd had its GDR listed on the Nasdaq Dubai and represented 26.15% of the paid up capital of the company in 2006. However, the GDR programme was terminated by the BNY Mellon in November, 2012 following various communications between Man Industries Ltd and the BNY Mellon. SEBI found that various exchanges between Man Industries Ltd and the BNY Mellon were neither timely disclosed on the exchanges nor informed to the GDR holders, as a result of which the GDR programme was terminated. Thus, violating PIT Regulations and terms of Listing Agreement.
The Noticees argued that the proceedings had been initiated after an inordinate delay and this should not be proceeded with. However, the SEBI held that the Noticees have failed to present how inordinate delay prejudices their right to defend. This is contrary to various judgements of SAT and Supreme Court of India including the recent SAT order of SIC Stocks and Services (Regstreet Law Advisors analysis can be accessed at: https://lnkd.in/dUA5nh8t). Further, to determine price sensitivity of termination of GDR programme, SEBI has relied upon the recent Supreme Court of India judgment of SEBI v. Abhijeet Rajan itself, which was ruled against SEBI (Regstreet Law Advisors analysis can be accessed at:https://lnkd.in/dPFCXfSU).
Our Founder and Managing Partner, Mr. Sumit Agrawal, former SEBI Officer, along with Dr. M. S. Sahoo, a distinguished professor at National Law University, Delhi [former Chairman of Insolvency & Bankruptcy Board of India (IBBI) and Board member of Competition Commission Of India as well as SEBI], has also recently written an article on the need to provide a timeline for SEBI to complete its proceedings and how inordinate delay is violative of principles of natural justice. The article can be accessed at https://lnkd.in/dy6xufPd
Readers can share their views on the issue with Regstreet Law Advisors at info@regstreetlaw.com.