NON-DISCLOSURES IN TERMS OF SAST (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVER) REGULATIONS AND PIT (PROHIBITION OF INSIDER TRADING) REGULATIONS

NON-DISCLOSURES IN TERMS OF SAST (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVER) REGULATIONS AND PIT (PROHIBITION OF INSIDER TRADING) REGULATIONS

Fine by SEBI on Regus Impex for SAST Violations

SEBI has imposed Rs 7 lakh penalty on Regus Impex for delay in disclosures pertaining to acquisition of shares of Dunlop India and Falcon Tyres under SAST Regultion.

FURTHER ISSUE OF CAPITAL OF BY DULOP & FALCON

In two separate orders dated July 23 ,2018, the SEBI said that in April 2012 Dunlop and Falcon had allotted 5 crore and 4.34 crore equity shares respectively on preferential basis to Regus and others.

Name of Company	Month of Allotment	No of Shares Allotted
Dunlop	April 2012	5 Crores
Falcon	April 2012	4.34 Croes

ALLOTMENT TO REGUS

Regus was allotted 1.75 crore shares, amounting to 14.35 per cent of the share capital of Dunlop and 1.52 crore shares or 19.60 per cent of the share capital of Falcon.

Name of Company	Name of the Allottee	No of Shares Allotted	Percentage of Shares Allotted
Dunlop	Regus	1.75 Crores	14.35%
Falcon	Regus	1.52 Crores	19.60%

FAILURE TO REPORT TO SEBI UNDER SAST AND PIT

For the acquisition of shares of the firms, Regus was required to make necessary disclosures in terms of SAST (Substantial Acquisition of Shares and Takeover) Regulations and PIT (Prohibition of Insider Trading) Regulations within two days of allotment of the scrips.

However, in the matter of Dunlop, Regus made disclosures in terms of SAST and PIT Regulations with a delay of 3 and 1,146 days respectively, the Securities and Exchange Board of India (Sebi) said.

In the case of Falcon, the regulator observed that the disclosures were made with a delay of 2 and 1,135 days under the SAST and PIT Regulations, respectively.

REGUS FAILED TO REPORT UNDER SAST AND PIT REGULATIONS

Regus has failed to with SAST and PIT Regulations in both the matter, Sebi said.

Accordingly, the regulator has imposed a penalty of Rs 3.5 lakh on Regus in each of the two matters.

SATS DECISION IN AKRITI GLOBAL TRADERS LTD. VS. SEBI

SAT’s decision in Akriti Global Traders Ltd. vs. SEBI, [2014] 122 CLA 531 (SAT), involved an appeal against SEBI’s Order penalising the appellant for failure to make timely disclosures under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations) of an increase in shareholding beyond the prescribed limits, pursuant to the issuance of shares under a scheme of amalgamation.

REPORTING TO SEBI AND STOCK EXCHANGE IS COMPULSORY EVEN IN CASE OF AMALGAMATION

The SAT held, in relation to the obligations to make disclosures under the provisions of the SAST Regulations as also under the PIT Regulations, 1992, that  “… irrespective of whether the shares were purchased from the open market or received on account of amalgamation or by way of bonus shares, if as a result of such acquisition/ receipt, the percentage shareholding of a person exceeds the limits prescribed under the respective regulations, then, it is mandatory to make disclosures under those regulations”.

SAT held that the obligation to make the disclosure arose once the prescribed shareholding limits were exceeded, irrespective of the mode and manner of acquisition of the shares.

Re: Pawan Kumar Sharma

This position in law was reiterated by the SAT in In Re: Pawan Kumar Sharma [MANU/SB/0174/2015].