SEBI–TARAPUR TRANSFORMERS: ₹31.46 CRORE DIVERSION — BUT WHERE IS THE RECOVERY?

 SEBI–TARAPUR TRANSFORMERS: ₹31.46 CRORE DIVERSION — BUT WHERE IS THE RECOVERY?

SEBI’s action in the Tarapur Transformers matter raises an important question about the effectiveness of securities market enforcement: Is punishing misconduct enough when the company’s funds have allegedly been diverted?

According to the facts stated in the order, ₹31.46 crore was diverted from Tarapur Transformers to connected entities.

The regulatory action included:

🔹 Market Ban: SEBI barred the company and its promoter-director from the securities market.

🔹 Monetary Penalties: Two individuals were penalised ₹32 lakh each.

🔹 No Penalty on the Company: SEBI chose not to impose a monetary penalty on the company, recognising that the financial burden could ultimately fall on its shareholders.

THE CORPORATE GOVERNANCE CONCERN

The decision not to penalise the company may be defensible from the perspective of protecting innocent shareholders from bearing an additional financial burden.

However, a more fundamental question remains unanswered:

What happens to the ₹31.46 crore allegedly diverted from the company?

A market ban restricts participation in the securities market. A monetary penalty punishes the persons held responsible. But neither measure, by itself, restores funds to the company.

The crucial distinction is between punishing misconduct and recovering the company’s money.

Where diversion of corporate funds is established, effective enforcement should also examine the available legal mechanisms for recovery, restitution and accountability, subject to the applicable law and the findings of the order.

MY VIEW

Protecting shareholders from an additional penalty is one objective. Protecting the company’s assets and restoring value to shareholders is another.

Both objectives matter.

The ultimate test of effective corporate governance enforcement is not merely whether wrongdoers are punished, but also whether appropriate steps are taken to protect the company’s interests and pursue recovery of its funds.

A MARKET BAN MAY PUNISH MISCONDUCT. IT DOES NOT, BY ITSELF, REPAIR THE COMPANY.

The question that deserves attention is simple:

Who will bring the ₹31.46 crore back to Tarapur Transformers, if recovery has not already been pursued through other proceedings?

— R V SECKAR, FCS, LLB

DATA PRIVACY UPDATE | DPDP ACT, 2023 GOVERNMENT ISSUES DIGITAL PERSONAL DATA PROTECTION (REMOVAL OF DIFFICULTIES) ORDER, 2026

 DATA PRIVACY UPDATE | DPDP ACT, 2023

GOVERNMENT ISSUES DIGITAL PERSONAL

 DATA PROTECTION (REMOVAL OF

 DIFFICULTIES) ORDER, 2026

The Ministry of Electronics and Information Technology (MeitY) issued the Digital Personal Data Protection (Removal of Difficulties) Order, 2026, vide S.O. 5458(E) dated 5 October 2026, to address textual and editorial ambiguities in two provisions of the DPDP Act, 2023. The Order came into force upon publication in the Official Gazette.

KEY CLARIFICATIONS

1. Section 9(1) – Personal Data of Children and Persons with Disabilities

The wording “child or a person with disability” has been replaced with “child or of a person with disability”.

This clarifies the provision concerning the requirement to obtain verifiable consent from the parent of a child or the lawful guardian of a person with disability who has a lawful guardian, before processing the relevant personal data.

2. Section 10(2)(c)(ii) – Audit Obligations of Significant Data Fiduciaries

The word “audit” has been replaced with “data audit”.

This aligns the periodic audit reference with the data audit terminology used elsewhere in Section 10 and clarifies the nature of the compliance obligation applicable to Significant Data Fiduciaries.

WHY DOES THIS MATTER?

These amendments address drafting ambiguities while clarifying two important areas of data protection compliance:

• Consent management: Organisations should review their procedures for obtaining and verifying parental or lawful guardian consent, wherever applicable.

• Data audit readiness: Significant Data Fiduciaries should review their periodic data audit arrangements and related compliance documentation.

COMPLIANCE TAKEAWAY

Companies, compliance officers, legal professionals and data protection teams should take note of these clarifications while preparing for compliance with the DPDP framework.

The Order makes targeted textual clarifications; it should not be interpreted as a blanket relaxation of data protection obligations.

WHY DIVIDEND PAYMENT IS NOT APPROVED BY THE MAJORITY SHAREHOLDER IN SIGACHI INDUSTRIES, CAMSON BIO TECHNOLOGIES (2014), DS KULKARNI DEVELOPERS (2016), JAIN IRRIGATION SYSTEMS (2019), AND RAJESH EXPORTS (2023).

 WHY DIVIDEND PAYMENT IS NOT APPROVED BY THE MAJORITY SHAREHOLDER IN SIGACHI INDUSTRIES, CAMSON BIO TECHNOLOGIES (2014), DS KULKARNI DEVELOPERS (2016), JAIN IRRIGATION SYSTEMS (2019), AND RAJESH EXPORTS (2023).

                     WHAT HAPPENED IN THE FIVE CASES?

Company	Year	What happened	Principal governance issue
Camson Bio Technologies	2014	Dividend resolution was defeated	Shareholders rejected the Board's proposed payout
D.S. Kulkarni Developers	2016	Dividend resolution was defeated	Shareholder opposition amid the company's financial/working-capital situation
Jain Irrigation Systems	2019	Dividend item was adjourned and subsequently not approved	Financial restructuring/debt considerations and shareholder voting
Rajesh Exports	2023	Board-recommended ₹1/share dividend was rejected	Significant shareholder/institutional opposition
Sigachi Industries	2026	10% dividend resolution defeated	Promoters voted in favour; public non-institutional shareholders overwhelmingly voted against

 

THEY MAY PREFER CASH RETENTION RATHER THAN DISTRIBUTION.
SHAREHOLDERS MAY BELIEVE THAT CASH SHOULD REMAIN WITH THE COMPANY FOR CAPEX, WORKING CAPITAL, DEBT REDUCTION OR ACQUISITIONS.

1. CONCERN ABOUT THE COMPANY'S FINANCIAL POSITION.\
2. INSTITUTIONAL INVESTOR DISSENT.\
3. THE BOARD'S RECOMMENDATION IS NOT BINDING ON SHAREHOLDERS.\
4. VOTING PARTICIPATION CAN RADICALLY CHANGE THE RESULT.\

Rajesh Exports — an especially important example

The dividend resolution was subsequently not approved at the AGM and the company cancelled the recommended dividend.

Jain Irrigation — a different situation

“The majority shareholder rejected the dividend.”

The broader corporate-governance lesson

These five cases demonstrate an important principle:

A dividend recommended by the Board is only a recommendation until shareholders approve it.

# R V Seckar, your compliance expert, 79047 19295

CIN, CONTACT NUMBER OF COMPANY ALREADY AVAILABLE IN MCA MASTER DATA DOES NOT OFFER IMMUNE IF THESE DETAILS ARE ABSENT IN COMPANY LETTER HEAD & BOARDS REPORT.

 CIN, CONTACT NUMBER OF COMPANY ALREADY AVAILABLE IN MCA MASTER DATA DOES NOT OFFER IMMUNE IF THESE DETAILS ARE ABSENT IN COMPANY LETTER HEAD & BOARDS REPORT.

ROC MUMBAI VS OM SHYAMJI FOODS PVT. LTD.

The fact that a company’s **CIN, contact number and other statutory details are available on the MCA Master Data does not provide immunity from the statutory requirement to disclose such particulars on the company’s letterhead and Board’s Report, wherever prescribed under the Companies Act, 2013.

ROC alleged that CIN, contact number and email absent from FY 2020-21  in Board Report and in letterhead.

Company argued that the information was already available in MCA master data.

ROC rejected that defense: availability on MCA records does not substitute for statutory disclosure on the company letterhead or board report document itself.

KEY TAKEAWAY:

Availability of information on the MCA portal ≠ compliance with the statutory disclosure requirement.

A company must ensure that all mandatory particulars are properly disclosed in the documents prescribed under the Companies Act, 2013.

# R V SECKAR, Your compliance expert 79047 19295,

WHAT IS THE DIFFERENCE BETWEEN OLD MGT-14 vs NEW MGT-14 — WITH EFFECT FROM 1 October 2026? WHY YOU CANNOT SEE THE NOTIFICATION ABOUT NEW MGT-14 FORM IN THE MCA WEBSITE

 WHAT IS THE DIFFERENCE BETWEEN OLD MGT-14 vs NEW MGT-14 — WITH EFFECT FROM  1 October 2026?

WHY YOU CANNOT SEE THE NOTIFICATION ABOUT NEW MGT-14 FORM IN THE MCA WEBSITE

 MCA website confirms MGT-14 is a V3 web-form, but one could not locate it  an official MCA notification/instruction kit publicly indexed yet. You have to login to access the new form.

 

Particulars	Earlier MGT-14	Revised MGT-14 from 1 Oct 2026
Form title	Filing of Resolutions and Agreements to the Registrar	Filing of Resolutions and Agreements to the Registrar
Legal provision	Section 117(1) and Rule 24	Section 117(1) and Rule 24
Company identification	CIN / company details	Expanded/structured company identification details
Purpose of filing	Selection of applicable purpose	More structured classification of the resolution/filing purpose
Type of resolution	Board / Special / other applicable resolution	More specific identification of the resolution type
Section under which resolution is passed	Relatively limited identification	Greater emphasis on the applicable section/rule/provision
Meeting details	Date/type of meeting	More detailed meeting and resolution particulars
Resolution date	Required	Required
Nature of resolution	Broad selection	More granular classification
Details of resolution/agreement	Basic particulars	Expanded particulars
Attachments	CTC of resolution, explanatory statement, altered MOA/AOA/agreement, etc., where applicable	Attachment requirements more closely linked to the purpose selected
MOA/AOA alteration	Linked attachments where applicable	More clearly integrated with the selected purpose
Certification	Director/CS/authorized signatory as applicable	Revised declaration/certification framework
Professional certification	Existing certification requirements	Greater validation of the person certifying/signing
Validation	Form-level MCA validation	More automated/field-level validation expected
Resubmission risk	Errors generally identified during processing	More errors likely to be blocked at filing stage
Compliance impact	Relatively form-centric	More disclosure- and classification-centric

 

THE BIGGEST PRACTICAL CHANGE

The revised form appears designed to make the resolution itself traceable:

Resolution → Legal provision → Purpose → Meeting → Resolution particulars → supporting document

This is significant for Company Secretaries because MGT-14 is no longer merely a form-filling exercise. The information entered into the form needs to correspond precisely with the notice, agenda, explanatory statement, minutes and certified true copy of the resolution.

# R V SECKAR, Your compliance expert 79047 19295,

WHY COMPANIES ARE LEVIED HUGE FINES FOR NOT OPENING OF SEPARATE BANK ACCOUNT IN CASE OF PRIVATE PLACEMENT OR PREFERENTIAL ALLOTMENT?

 WHY COMPANIES ARE LEVIED HUGE FINES FOR NOT OPENING OF SEPARATE BANK ACCOUNT IN CASE OF PRIVATE PLACEMENT OR PREFERENTIAL ALLOTMENT?

JAY AMBE SUPERMARKETS LTD WAS FINED BY ROC AHAMADABAD Rs 10 CRORES FOR NOT OPENING SEPARATE BANK ACCOUNT AND FOR NOT FILING PAS-3

•             Section 42(6): application money must be kept in a separate bank account in a scheduled bank and used only for permitted purposes.

•             Subscription money belongs to the proposed investors until the statutory conditions for allotment are satisfied.

•             Therefore, the company should not be able to treat the money as its ordinary working capital.

•             PAS-3 establishes the statutory record of the allotment.

ROC CASES — FAILURE TO MAINTAIN SEPARATE BANK ACCOUNT

# R V SECKAR , Your compliance expert 79047 19295,