Securities and Exchange Board of India (Sebi) has sought additional powers for itself to impose fines besides issuing suspension and termination orders to stock brokers as well as annulling the central government’s power to frame rules on holding inquiries and imposing penalties against bourse violators. The Union Law Ministry has shot down the proposal. At present, Sebi is not empowered to impose monetary penalties — it merely issues disciplinary orders against errants while the monetary fine is adjudicated upon by a subordinate Sebi officer appointed by Sebi’s board. This board includes top officials from the Finance Ministry. At present, Sebi is not empowered to impose monetary penalties — it merely issues disciplinary orders against errants while the monetary fine is adjudicated upon by a subordinate Sebi officer appointed by Sebi’s board. This board includes top officials from the Finance Ministry.
At present, Sebi is not empowered to impose monetary penalties — it merely issues disciplinary orders against errants while the monetary fine is adjudicated upon by a subordinate Sebi officer appointed by Sebi’s board. This board includes top officials from the Finance Ministry.
The Finance Ministry had, initially, supported Sebi’s August 2017 proposal that it be given powers to levy monetary penalty in addition to issuing punitive directions. Sebi argued that a dual authority was “resulting in substantial delay and duplication of proceedings on the same cause of action”. In October 2017, Sebi sent a second proposal suggesting that a “uniform procedure” be put in place for piloting all enforcement proceedings under the securities laws.
Meanwhile, Sebi has imposed a total penalty of Rs 1.02 crore on 11 present and former promoters of Vas Infrastructure for failing to make public announcement upon acquisition of shares of the firm. The 11 current and erstwhile promoters are Jayesh V Valia (HUF), Raj J Valia, Madhav J Valia, Jayesh V Valia, Sangeeta J Valia, Vinodrai V Valia, Yashraj Containeurs, Precision Containeurs, Vasparr Shelter, Vasparr Trading and Pushpanjali Drums.
In an order, Sebi noted that the promoters were holding 67,31,154 shares constituting 53.85 per cent of the share capital of Vas Infrastructure Ltd (VIL) as on March 31, 2011. The company had allotted 25 lakh share warrants (detachable) on April 30, 2010 to six promoters and certain other non-promoter investors. Subsequently on April 6, 2011, the six promoters acquired 6.25 lakh or 2.19 per cent equity shares of VIL upon conversion of their portion of warrants which resulted in increase in the shareholding of the entire promoter group in the company from 53.85 per cent to 56.04 per cent.
As the collective shareholding of the entire promoter group increased to 56.04 per cent and thereby exceeded the limit of 55 per cent as prescribed under the SAST (Substantial Acquisition of Shares and Takeovers) Regulations, the 11 promoters were required to make public announcement to acquire shares within 4 working days from the date of acquisition.
The promoters have failed to make public announcement as mandated by SAST Regulations, thereby violating it and hence, are liable for penalty, the Securities and Exchange Board of India (Sebi) said in the order dated December 29.
As the shareholding of the promoters crossed the threshold limit of 54 per cent, they were required to make a disclosure of the acquisition to VIL and the stock exchanges, where shares of the firm are listed, within two working days from the date of acquisition.