SEBI Penalizes Promoter-Directors Of Advik Capital

SEBI Penalizes Promoter-Directors Of Advik Capital

While Rs.3 lakh has been imposed on all three collectively, they are also to pay Rs.10 lakh in the ratio of Rs.4 lakh and Rs.3 lakh

The Securities and Exchange Board of India (SEBI) has imposed penalties of Rs.13 lakh on Vikas Garg, Seema Garg, and Sukriti Garg, the promoter-directors of Advik Capital Ltd for failing to comply with disclosure requirements of the company’s share acquisitions.

The market regulator highlighted that the noticees acquired a significant stake in Advik Capital from October 2021 to April 2022, which required mandatory disclosure obligations under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

The regulations mandate that any acquisition of shares aggregating to five percent or more of a target company's total shares necessitates timely disclosure to stock exchanges.

The investigation exposed the delays ranging from 44 to 234 days in disclosures, breaching the stipulated two-day timeframe.

Seema's sale of 2.03 percent shares in February 2022 also failed to meet disclosure deadlines, resulting in a 107-day delay.

However, the noticees argued that they had announced of their intention to acquire shares on 18 May 2022. This complied with certain regulations but omitting disclosures required under different clauses of SAST Regulations.

However, SEBI held that the submissions lacked merit. It emphasized the importance of timely and comprehensive disclosures in ensuring market transparency and protecting the interests of investors.

SEBI cited the decision of the Securities Appellate Tribunal (SAT) in the Coimbatore Flavors & Fragrances Ltd vs. SEBI (Appeal No. 209 of 2014) case, wherein it was held that disclosures were crucial for market transparency and investor protection. It ruled that accurate and timely confessions enabled the right decision-making among investors and facilitated effective regulatory oversight in the capital markets.

SEBI also referred to the Virendra Kumar Jayantilal Patel vs. SEBI (Appeal No. 299 of 2014), wherein the SAT reiterated the mandatory nature of the disclosure timeline. It held that any delay or omission in complying with disclosure could undermine market integrity and investor confidence.

It referred to Section 15A(b) of the SEBI Act on penalties for failure to furnish information within a specified timeline.

While acknowledging the absence of quantifiable figures on gain or loss, the market regulator justified the penalties of Rs.4 lakh on Vikas and Rs. 3 lakh each on Seema and Sukriti. Additionally, a Rs. 3 lakh fine was also imposed on them.