LATEST CASE LAWS ON SEBI LODR VIOLATIONS

 LATEST CASE LAWS ON SEBI LODR VIOLATIONS

INCREASED THRESHOLDS FOR HIGH VALUE DEBT LISTED ENTITIES (HVDLES).

The most recent notable case law on SEBI’s Listing Obligations and Disclosure Requirements (LODR) violations involves enforcement actions in 2025–26, where SEBI’s Special Court and regulatory amendments tightened compliance norms, particularly for High Value Debt Listed Entities (HVDLEs).

Threshold for HVDLEs raised from ₹1,000 crore to ₹5,000 crore of outstanding non-convertible debt.

·      Entities below the revised threshold are exempt from HVDLE-specific obligations.

•     Aim: To reduce compliance burden for mid-sized issuers while strengthening governance for large debt-listed entities

DISCLOSURE LAPSES BY ONWARD TECHNOLOGIES LTD

Companies such as Onward Technologies faced scrutiny for disclosure lapses under Regulation 30, and SEBI amended the LODR framework in January 2026 to raise thresholds and streamline governance.

·      Faced proceedings linked to disclosure lapses under Regulation 30 of SEBI LODR.

•     A U.S. Circuit Court judgment (April 2025) was disclosed to Indian exchanges, highlighting cross-border compliance implications.

SEBI SPECIAL COURT ORDERS (2024–25):

•     Cases against plantation companies (e.g., Sagar Green Gold Plantation Group Pvt. Ltd., Bon Plantations & Exports Ltd.) for violations including misstatements and non-compliance with disclosure norms.

•     Reinforced SEBI’s stance that failure to comply with LODR obligations can attract criminal liability.

COMPARISION OF KEY CASES

Case/Entity	Year	Violation Type	Outcome/Action
Onward Technologies Ltd	2025	Disclosure lapses under Reg. 30	Exchange disclosure, regulatory scrutiny
Sagar Green Gold Plantation Group	2025	Misstatements, non-compliance	SEBI Special Court judgment
Bon Plantations & Exports Ltd	2024	Disclosure failures	Conviction by Principal Sessions Judge
P.G. Fortune Agritech Ltd. (Nov 2024)	2024	Misstatements and failure to comply with LODR disclosure obligations	Criminal conviction of company executives
M’Belle International Pvt. Ltd.	(Jul 2025)	Non-compliance with LODR norms and misstatements.	Criminal sanctions against promoters/directors.

IMPLICATIONS FOR LISTED COMPANIES

STRICTER ENFORCEMENT	Courts and SEBI are increasingly holding directors and officers accountable.
DISCLOSURE SENSITIVITY	Even foreign judgments (like Onward Technologies’ U.S. case) must be disclosed under LODR.
Compliance Burden Shift	Mid-sized issuers benefit from reduced obligations, but large debt-listed entities face enhanced governance scrutiny.
Risk of Criminal Liability	Non-compliance can lead to prosecution in SEBI Special Courts.

 

DISCLOSURE OF PENALTIES (2023 AMENDMENT)

CHANGE:

SEBI mandated disclosure of all penalties levied on listed companies (even minor ones).

                                        IMPACT:

Penalties became “deemed material events” under Schedule III of LODR.

                                  COMPLIANCE LESSON:

Companies must disclose even small fines to exchanges, reinforcing transparency.

 

KEY TAKEAWAYS FOR LISTED COMPANIES

CRIMINAL LIABILITY:

Courts are convicting directors for disclosure failures, not just imposing fines.

TRANSPARENCY MANDATE:

Even small penalties must be disclosed to exchanges.

MATERIAL EVENTS:

Regulation 30 disclosures are non-negotiable.

GOVERNANCE PRESSURE:

 Large debt-listed entities face enhanced compliance under 2026 amendments.

LEGACY CASES:

SEBI continues to prosecute old violations, showing long-term accountability.

R V SECKAR , FCS, LLB 79047 19295

HOW TO REGISTER PROFESSIONAL TAX IN MAHARASHTRA THROUGH ONELINE

 HOW TO REGISTER PROFESSIONAL TAX IN MAHARASHTRA THROUGH ONELINE

THE GOVERNMENT IS CONSIDERING RAISING THE WAGE CEILING FOR MANDATORY PF CONTRIBUTIONS FROM ₹15,000 TO ₹25,000

 THE GOVERNMENT IS CONSIDERING RAISING THE WAGE CEILING FOR MANDATORY PF CONTRIBUTIONS FROM ₹15,000 TO ₹25,000

WHAT IS NEW ?

The government is actively considering a proposal to raise the EPFO mandatory wage ceiling from the current ₹15,000 per month to ₹25,000 per month. This change is not yet implemented but is expected to be finalized soon, over a decade after the last revision in September 2014.

SUPREME COURT DIRECTIVE:

The Supreme Court recently directed the central government to review the existing wage ceiling within a four-month timeframe, citing that the current limit is outdated and excludes a large number of workers from social security benefits. This directive has fast-tracked the deliberation process.

POTENTIAL IMPLEMENTATION DATE:

If approved by the CBT, the new ceiling could come into effect from April 1, 2026, after a formal government notification.

STAKEHOLDER INPUT:

Consultations with employers and trade unions will precede any final decision, as the move has implications for both higher compliance costs for employers and reduced take-home pay for some employees.

EXPANDED COVERAGE:

The primary goal is to bring over 10 million additional workers, particularly in the private sector and those with low to mid-level incomes, under the mandatory social security net.

INCREASED SAVINGS:

For newly included employees, mandatory contributions will lead to larger long-term retirement savings and higher pension payouts over time.

EMPLOYER COSTS:

Employers will face an increased cost burden as they will be required to match the higher contributions for a broader range of employees.

SECTOR-SPECIFIC IMPACT (PRACTICAL EXAMPLES)

Here’s how PF ceiling changes can affect companies differently:

1.   Labor-Intensive Manufacturing

2.   Large hourly workforce, often near threshold.

3.   Higher PF contributions can significantly raise cost of goods sold (COGS).

4.   Competitive bidding may squeeze margins further.

REAL-CASE PARALLEL:

When statutory gratuity or ESI contribution thresholds changed previously, MSMEs in textiles/discrete manufacturing reported margin pressure due to higher fixed overheads.

2. IT & SERVICES FIRMS

·      Higher wages generally above ₹15,000.

·      Currently, many pay only voluntary contributions or negotiate with employees.

·      New mandatory contributions directly raise labour cost per head.

·      A hypothetical mid-sized IT firm with 500 mid-level engineers sees an annual increment in employer PF outgo of ~₹72 lakh (₹1.2 lakh/employee/year) — potentially impacting competitiveness unless recovered.

3. HOSPITALITY & RETAIL

·      Mid-tier wages often near ₹15,000–₹25,000 range.

·      A higher ceiling formalises PF for many already in informal coverage arrangements.

·      May lead to increased social security compliance and transition costs.

BALANCE SHEET & CASH FLOW IMPLICATIONS

1. Higher Employer Contributions

·      Increase in statutory liabilities (PF payable on P&L).

·      Recurrent cost increases require working capital adjustments.

2. Reserve & Budget Adjustments

·      CFOs will need to rebalance forecasts:

·      Compensation budgets,

·      Operating margins,

·      Headcount plan efficiency.

3. SHORT-TERM PROFIT PRESSURE

Policies like minimum salary thresholds or social security expansions historically reduce short-term margins but can improve employee retention and long-term productivity.

PRICING & CONTRACTING

Industries with thin margins may need to renegotiate contracts, increase prices, or adopt technology automation to offset higher statutory costs.

INDIA’S TOP 10 PRIVATE COMPANIES (CROSS-SECTOR PAYROLL TRENDS)

AGGREGATE TRENDS IN EMPLOYEE COST

An ETHRWorld analysis of annual reports across top Indian companies shows:

·      Employee benefits expense increased ~30% between FY22 and FY24, while headcount grew only ~8%.

·      Example: HDFC Bank’s employee benefits rose from ₹15,897 crore to ₹31,023 crore (a ~64% jump).

TCS, Infosys, HCLTech all saw double-digit increases in employee benefit expense (25%–33%).

REAL NUMBERS FOR WORKFORCE COSTS

COMPANY	FY24 EMPLOYEE BENEFITS	FY22 EMPLOYEE BENEFITS	% Increase
HDFC Bank	₹31,023 crore	₹15,897 crore	+64%
TCS	~₹1.40 lakh crore	(2 years prior)	+26% est.
Infosys	+25% (employee cost rise)	----	----
HCLTech	+30%	----	----

 

KEY TAKEOVER

Raising the PF wage ceiling to ₹25,000 materially increases statutory labour costs for companies and will require recalibration of payroll strategies and compensation structures.

The impact is quantifiable and non-trivial for sectors with large employee bases in the ₹15k–₹25k range, particularly manufacturing, IT services, retail, and hospitality. Over time, while employee retirement coverage improves, companies must absorb or strategically allocate higher contributions to maintain competitiveness and profitability.

R V SECKAR, FCS,LLB 79047 19295

BON FRESH FOODS WAS PENALIZED BY ROC CHENNAI FOR ISSUANCE OF SECURITIES WITHOUT SPECIAL RESOLUTION AND NON-FILING OF MGT-14

 BON FRESH FOODS WAS PENALIZED BY ROC CHENNAI FOR ISSUANCE OF SECURITIES WITHOUT SPECIAL RESOLUTION AND NON-FILING OF MGT-14

ROC, Chennai in the above case has addressed a specific compliance failure regarding the issuance of securities.

WHAT IS THE VIOLATION?

The company was found to have accepted debenture application monies from an investor before fulfilling the statutory requirements mandated by the Companies Act, 2013. Specifically:

SECTION 179(3)(c):

This section mandates that the power to issue securities, including debentures, must be exercised by the Board of Directors only by means of resolutions passed at meetings of the Board.

SECTION 117(3)(g):

This requires certain resolutions, including those passed under Section 179(3), to be filed with the ROC in Form MGT-14 within 30 days.

THE LAPSE:

By obtaining the application money before passing the necessary special resolution and filing the required E-form MGT-14, the company bypassed the "prior approval" and "transparency" mechanisms intended to protect stakeholders.

The company was also found to be failing to obtain valuation reports for share allotments.

PENALTIES AND ADJUDICATION

The ROC Chennai, acting as the Adjudicating Officer, typically imposes penalties under Section 450 (the general penalty provision) when no specific penalty is provided for a particular contravention, or under Section 117(2) for the failure to file resolutions.

BON FRESH FOODS PRIVATE LIMITED IS A START-UP COMPANY

·    The ROC took note that the company is a DPIIT-recognized startup.

·    Lesser Penalty (Section 446B): Because of its startup status, the company benefited from Section 446B, which limits the penalty to half of the amount normally prescribed, subject to a maximum cap (usually ₹2,00,000 for the company and ₹50,000 for officers).

LESSOR PENALTY

ROC, Chennai levied a lessor penalty due to the following reasons:

·    The ROC took note that the company is a DPIIT-recognized startup.

·    Lesser Penalty (Section 446B): Because of its startup status, the company benefited from Section 446B, which limits the penalty to half of the amount normally prescribed, subject to a maximum cap (usually ₹2,00,000 for the company and ₹50,000 for officers).

·    Further the company is running at loss.

Hence , ROC Chennai levied Rs 5000 penalty on company and Rs 5000 each on the two directors of the company.

LESSONS LEARNED :

1.           In case of further issue of securities, the company should pass a special resolution and to file MGT-14 before receiving the money from the applicant.

Section 446B – Lesser penalties for certain companies

2.           In case of start-up companies One Person Companies (OPCs), Small Companies, and Producer Companies are liable to not more than 50% of the penalty prescribed for such non-compliance., they can request to reduce the penalty up to 50%  or lessor penalty as prescribed in the CA 2013.

3.           Since , it is loss making start-up company, it is entitled to lessor penalty.

R V SECKAR, FCS, LLB ,79047 19295

SHE-BOX REGISTRATION UNDER POSH ACT

 SHE-BOX REGISTRATION UNDER POSH ACT

MANDATORY FOR ORGANISATIONS WITH 10+ EMPLOYEES

WHO NEEDS TO REGISTER COMPULSORILY?

    Organizations with 10+ Employees

    LLPs, Private Companies, Public limited companies, Listed companies, partner ships, trusts, NGOs, Societies and public sector bodies 

    Internal Committees (IC) under the POSH Act,2013.

HOW TO REGISTER YOUR IC ON SHE-BOX?

Visit the Official She-Box portal (Shebox.nic.in)

Register your organization’s details

Provide IC Profiles- Presiding Officer, members,  external member

Verify and upload relevant documents

NON REGISTRATION CAN RESULT IN

    Penalties for non-compliance

    Credibility Concerns during audit/enquiries

    Legal and reputational risks.

 Non-constitution of IC may lead to cancellation of industrial licence

R V SECKAR, FCS, LLB 79047 19295

SEBI ALLEGES INSIDER TRADING BY EY & PWC EXECUTIVES

 SEBI ALLEGES INSIDER TRADING BY EY & PWC EXECUTIVES

India’s market regulator, SEBI, has issued show-cause notices accusing current and former executives at consulting firms EY and PwC, along with personnel linked to private equity firms Carlyle Group and Advent International, of violating insider trading rules tied to a 2022 Yes Bank share sale. 

The notice says unpublished price-sensitive information about the deal—which involved Carlyle and Advent buying a 10% stake in Yes Bank for about $1.1 billion—was shared and used to make illegal gains in the market. Yes Bank shares jumped ~6% after the public announcement in July 2022. 

A total of 19 individuals are accused; some traded on confidential information and others shared it. SEBI also pointed to weak compliance practices at EY and PwC regarding restricted trading lists and internal controls. 

MCA TIGHTENS REGISTERED OFFICE COMPLIANCES WITH EFFECT FROM 1st FEBRUARY 2026

 MCA TIGHTENS REGISTERED OFFICE COMPLIANCES WITH EFFECT FROM 1^st  FEBRUARY 2026

WHAT HAS CHANGED ?

The Ministry of Corporate Affairs (MCA) has strengthened enforcement around Section 12 of the Companies Act, 2013, focusing on the authenticity, accessibility, and verifiability of a company’s registered office.

SUBSTANCE BASED VERIFICATION

The emphasis has shifted from form-based disclosure to substance-based verification.

KEY REGULATORY THRUSTS INCLUDE:

·    Stricter scrutiny of registered office addresses,

·    Enhanced verification mechanisms (digital and physical),

·    Faster escalation for non-compliance.

TIGHTENED "ACTIVE" OFFICE COMPLIANCE

The MCA has revamped Form INC-22A (ACTIVE). This is the primary tool used to verify that a company is not a "shell" and actually operates from its declared address.

HOW MCA VERIFIES REGISTERED OFFICE

·    The Registered Office is no longer a mere statutory address-it’s now 𝐚 𝐝𝐢𝐠𝐢𝐭𝐚𝐥𝐥𝐲 𝐯𝐞𝐫𝐢𝐟𝐢𝐞𝐝 𝐜𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐢𝐝𝐞𝐧𝐭𝐢𝐭𝐲.

·    MCA will cross-verify Registered Office details with utility records, municipal databases and DigiLocker documents.

REGULATORY GOAL

The tightening aims to:

·    To curb shell and paper companies,

·    To ensure traceability and jurisdictional accountability,

·    To improve coordination with tax, banking, and enforcement agencies.

·    Registered office is being treated as a compliance anchor, not a procedural one.

RISK OF NON-ADHERENCE:

Mismatch in records may lead to

·    Freezing of MCA filings,

·    De-registration of address and

·    Heightened scrutiny.

·    Initiation of strike-off proceedings,

·    Adverse ROC remarks and inspections,

·    Director-level consequences in persistent defaults.

WHICH COMPANY IS MOST AFFECTED?

Higher scrutiny is expected for:

·    Companies with frequent address changes,

·    Start-ups using residential or co-working addresses,

·    Inactive, dormant, or low-filing entities,

·    Foreign subsidiaries with thin on-ground presence.

·    Virtual offices, outdated lease deeds, old or inconsistent utility bills.

PENALTIES FOR NON-COMPLIANCE

VIOLATION	PENALTY
Failure to file INC-22A	₹10,000 to ₹50,000 + potential "Inactive" status
Incorrect Office Address	Up to ₹1,000 per day (Max ₹1 Lakh)
Non-disclosure on Letterheads	₹1,000 per day on the company and defaulting officers

 

KEY TAKEAWAYS

From 1 February 2026, the registered office is no longer a static disclosure but a live compliance test.

Companies treating it as a clerical requirement face elevated regulatory and governance risk.

Foreign subsidiaries with thin on-ground presence.

R V SECKAR, FCS, LLB ,79047 19295