The Securities Appellate Tribunal (SAT) has set aside a penalty imposed by markets regulator Sebi on Reliance Industries chairman Mukesh Ambani and his brother Anil for an alleged violation of takeover codes. The imposition of penalty by Sebi was without any authority of law, and it believes there was no violation of regulations, the SAT observed.
“The imposition of penalty upon the appellant is without any authority of law. Consequently, the impugned order cannot be ustained and is quashed,” the appellate tribunal said in its order, adding the appellants have not violated Substantial Acquisition of Shares and Takeovers (SAST) regulations.
In April 2021, Sebi had levied fines totalling Rs 25 crore on Ambani brothers and their wives Nita and Tina and others for non-compliance with takeover norms in RIL. The actual case dated back to January 2000, when shares worth Rs 12 crore were issued by RIL to 38 entities, pursuant to conversion of warrants.
According to Sebi, about 6.83% of stake acquired by RIL’s promoters together with a few other entities was alleged to be over the 5% limit prescribed under the takeover regulations for promoters. The regulations mandate that if promoters acquire more than 5% of voting rights in a fiscal, then they have to make a public announcement.
In its order, Sebi had said RIL’s promoters had failed to disclose the acquisition of more than 5% stake in the company.
Later in 2011, Sebi issued show-cause notices to RIL promoters stating that they did not make any public announcements, and thus were in violation of the takeover regulations.