Securities and Exchange Board of India (SEBI): Madahabi Puri Bach, Whole Time Member while keeping in view the violation of MPS requirement, the Tribunal considered it to be appropriate that Riddhi Siddhi Gluco Biols Ltd. (RSGBL) increase its public shareholding and further gave directions of debarment from the securities market for the violation.
In the instant case, it was alleged in the show cause notice that the Noticees participated in a fraudulent device or scheme at various stages to fraudulently show that the shares of RSGBL were frequently traded shares and thereafter making the delisting offer successful at fraudulently arrived price. It was also alleged that RSGBL did not comply with the requirement of Minimum Public Shareholding (MPS).
The Tribunal considered the various conditions so put forth, and the existing circumstances and was thus of the opinion that violation of Sections 12A(a), (b) and (c) of SEBI Act, 1992 read with Regulations 3(a), (b), (c), (d), 4(1) & 4(2)(a) of PFUTP Regulations, 2003 and Regulations 4(5)(a), (b) &(c) of Delisting Regulations against Noticee No. 1 to 9 and 13 to 35 stands established.
The Tribunal also gave relief to some Noticees by stating,
“Stuti, Siwana and Kauvery (Noticee No. 7, 8, & 9) have merged/amalgamated with Vital (Noticee No. 6) and are no longer in existence. Therefore, any directions passed against Stuti, Siwana and Kauvery under Sections 11(1), 11(4) and 11B (1) of SEBI Act may not serve any purpose”.
The Tribunal stated,
“…it is imperative that this balance be restored and the disproportionate advantage arising out of non-compliance of the MPS requirement not be permitted to be vested with the Promoter / Promoter Group. In view thereof, in the interest of all investors and the orderly development of the securities market, it is necessary to pass suitable directions”.
The Tribunal was of the opinion,
“Section 11 of SEBI Act casts a duty on the Board to protect the interests of investors in securities and to promote the development of and to regulate the securities market”.
Further very sternly stated,
“Thus, power to take all measures necessary to discharge its duty under the statute which is a reflection of the objective disclosed in the preamble has been conferred in widest amplitude. Pursuant to the said objective, PFUTP Regulations have been framed. The said Regulations apart from other things aim to preserve and protect the market integrity in order to boost investor confidence in the securities market. By executing a fraudulent scheme, as has been executed by the Noticees in the instant matter, the price discovery system itself is affected. It also has an adverse impact on the fairness, integrity and transparency of the stock market”.
[Riddhi Siddhi Gluco Biols Limited, In Re, WTM/MB/IVD/ID12/12998/2021-22, decided on 11-08-2021]
Agatha Shukla, Editorial Assistant has reported this brief.