Non-banking finance company Tata Capital has settled a case concerning the issuance of unlisted Cumulative Redeemable Preference Shares (CRPSs) with the markets regulator SEBI, after paying Rs 14.4 lakh.
The move came after the company filed a suo-motu settlement application with SEBI proposing to settle by “neither admitting nor denying the findings of facts and conclusions of law” the enforcement proceedings that may be initiated against it for the regulatory violations.
In its settlement order, SEBI noted that Tata Capital remitted Rs 14.4 lakh and accordingly directed that “any proceedings that may be initiated for the violations …are settled in respect of the applicant”.
What is the case?
The matter pertains to two issuances of the unlisted CRPSs on a private placement basis by Tata Capital during April 2015 and March 2017.
However, structured as private placements, these CRPSs were down-sold to more than 200 investors within six months of allotment (in April 2015 and March 2017).
Thus, the issuance of these CRPSs is deemed to be a “public issue” and the applicant is in violation of the provisions of the Companies Act 2013 and SEBI’s (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013, the regulator noted.
Under the rule, a private placement is restricted to a select group of investors, not exceeding 200 in a financial year. Further, exceeding the 200 limit is deemed to be a “public issue” and requires stricter disclosure and compliance requirements.
SEBI order on Navi
In a separate settlement order, Navi AMC and Navi Trustee settled a case of violating mutual fund rules with SEBI after paying Rs 10.2 lakh.
The case relates to charging scheme-related expenses exceeding the permissible limit.
Navi AMC and Navi Trustee, in their voluntary settlement application, submitted that the asset management company booked all the scheme-related expenses allowed as per the grey list published by AMFI in its books, SEBI noted.
However, it was noted that such expenses exceeded the permissible limit of 2 basis points of the respective scheme’s AUM for the FY 2024-25, which is not in line with provisions of mutual fund rules, it added.
SEBI noted that remedial actions were taken by applicants, including increasing the TER (total expense ratio) of eight schemes, re-visiting all expenses, taking initiatives to reduce expenses to be borne by the scheme and revision of minimum investment amount.
