SEBI reiterates the importance of timely disclosures with respect to SEBI LODR Regulations

SEBI reiterates the importance of timely disclosures with respect to SEBI LODR Regulations

Markets Regulator Securities and Exchange Board of India (SEBI) had conducted an investigation in the scrip of Global Securities Limited, a company listed at BSE Limited toexaminethe matters relating to preferential allotment process and utilization of preferential issue proceeds, disclosure requirements interms of SEBI (Prohibition of Insider Trading) Regulations, 1992 (PIT Regulations) and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations, 2011) and Listing Agreement by the company during the period from May 1, 2010 to April 30, 2014 (Investigation Period or IP).

Pursuant to the investigation, it was observed that Promoters of the company namely; Smita D Gandhi (Noticee no. 1), Yogesh Shah (Noticee no. 2) and Yogeshbhai Shah HUF (Noticee no. 3), sold more than 25000 shares and failed to make requisite disclosures in terms of regulation 13(4A) of SEBI (PIT) Regulations,1992 r/w 13(5) of SEBI (PIT) Regulations,1992 r/w Regulation 12 of the SEBI (PIT) Regulations, 2015. Thus, adjudication proceedings u/s 15A(b) of SEBI Act, 1992 were initiated against these Noticees.

The Adjudicating Officer (AO) opined that the names of the above mentioned Promoters of Global Securities Ltd did not appear in the shareholding pattern from September 2012 quarter onwards.

Further, it was observed that there was a reduction in the shareholding of these promoters by more than 25000 shares during this quarter. Subsequently, vide email dated December 20, 2019,BSE confirmed that the exchange was not in receipt of any disclosures under SEBI (SAST) Regulations and SEBI (PIT) Regulations from aforesaid entities in September 2012 quarter.

Therefore, it was concluded that these entities did not make the required disclosures for the aforesaid changes in their shareholding. The same was in violation of regulation 13(4A) of SEBI (PIT) Regulations,1992 r/w 13(5) of SEBI (PIT) Regulations,1992 r/w Regulation 12 of the SEBI (PIT) Regulations, 2015.

It was also observed that the Noticee had failed to file quarterly shareholding pattern for June 2013 and September 2013 quarters as required under Clause 35 of the Listing Agreement r/w Regulation 103 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and section 21 of the SCRA, 1956.

The judgment of Coimbatore Flavors & Fragrances Ltd. vs SEBI was also referred to wherein the Hon'ble Securities Appellate Tribunal (SAT) had observed that the purpose of these disclosures is to bring about more transparency in the affairs of the companies. True and timely disclosures by a company or its promoters are very essential from two angles. Firstly; investors can take a more informed decision to invest or not to invest in a particular scrip secondly; the Regulator can properly monitor the transactions in the capital market to effectively regulate the same.

Hence it was concluded that the Noticee had violated the provisions of regulation 13(4A) of SEBI (PIT) Regulations,1992 r/w 13(5) of SEBI (PIT) Regulations,1992 r/w Regulation 12 of the SEBI (PIT) Regulations, 2015 and hence, a penalty of Rs. 2 lakh has been imposed upon each of the Noticees.