VIOLATION OF LODR REGULATION BY PREMIER POLYFILM BY ASSERTING THAT IT DID NOT KNOW A PARTICULAR TRANSACTION IT ENTERED IS A RELATED PARTY TRANSACTION
PREMIER POLYFILM’S RELATED PARTY TRANSACTION VIOLATION
Premier Polyfilm was fined by SEBI for Rs 3 lakh in its December 9,2024 order for not taking approvals from its audit committee and shareholders for related-party transactions (RPTs).
The SEBI above order illustrated that being a listed entity since 1994, Premier Polyfilm is reasonably expected to understand the nuances of compliances.
PREMIER POLYFILM CANNOT CLAIM IGNORANCE OF LAW
Premier Polyfilm cannot claim ignorance of law as an excuse for its violation says SEBI .
Premier Polyfilm as a listed entity, did not conduct as per required prudence in carrying out such RPTs and therefore, violated the provisions of LODR (Listing Obligations and Disclosure Req uirements)" SEBI Said.
Premier Polyfilm had entered into RPTs s between April 1, 2022, to March 31, 2023 and April 01, 2023 to May 21, 2023 without taking prior approval its of Audit Committee.
Premier Polyfilm also entered into an RPT, the value of which exceeded 10 percent of its turnover, in FY23 but sought shareholder approval for this transaction only in September 2023 with retrospective effect.
Premier Polyfilm submitted that it was under the belief that RMG Polyvinyl was not a related party and therefore did not make the requisite disclosure in the half yearly statements of RPTs submitted to the exchange.
WHAT WE LEARN FROM THIS CASE STUDY ?
· Ignorance of law cannot be an excuse by a listed company with the two decades of listing experience.
· Failure to classify the transactions which are related party transactions and failure to obtain approval from Audit committee is an LODR violation.
· If related party transactions exceeded 10% of a listed company turnover, it should take prior approval from its members. It cannot take its member’s approval retrospectively.
R V SECKAR , FCS
79047 19295
rvsekar2007@gmail.com
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