Mon. Sep 21st, 2020

Actual Lose to the investors is not pre-requisite for penalty on non-disclosure under Takeover Regulations

2 min read

Security and Exchange Board of India: The security market regulator imposed penalty of Rs.
4,50,000 on M/s. Khatau Exim Limited (the
company) for non compliance with Takeover Regulation, 1997 and Sec. 15A(b) of
the SEBI Act, 1992. The company was found guilty for not to make annual filing
to the stock Exchanges where the company’s shares were listed in respect of the
holdings of the promoters or person(s) having control over the company.

The adjudicating officer of SEBI while considering the quantum of
penalty relied on the decisions of the Supreme Court in SEBI v.  Shri Ram Mutual Fund in which it was ruled
that, “penalty is attracted as soon as the contravention of the statutory
obligation as contemplated by the Act and the Regulations is established and
hence the intention of the parties committing such violation becomes wholly
irrelevant…”.  The adjudicating
officer observed that even if the regulator fails to establish intention behind
non-disclosure penalty may be imposed.  The adjudicating officer further opined that,
“the argument put forth by the Noticee that there is no question of any gain
or advantage that has accrued, let alone any disproportionate gain or unfair
advantage and that the alleged delay was without any malafide intention is also
not relevant for the given case”. It follows as held by SAT in Komal
Nahata v. SEBI that penalty for non compliance of the Takeover Regulations,
1997 is not dependent upon the investors actually suffering on account of such
non disclosure. [Adjudication Order in the matter of M/s. Khatau Exim Limited,
ORDER NO.AK/AO-74/2015, decided on 22.10.2015]

Source: Legal news India

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