EX COMPANY SECRETARY OF KALYANI STEELS LIMITED WAS FINED ₹95.55 LAKH (₹ 1 Crore)FOR RELATED PARTY VIOLATIONS BY SEBI

EX COMPANY SECRETARY OF KALYANI

 STEELS LIMITED WAS FINED ₹95.55 LAKH

 (₹ 1 Crore)FOR RELATED PARTY

 VIOLATIONS BY SEBI

RPT VIOLATIONS

Kalyani Steels Limited has settled a regulatory case with Securities and Exchange Board of India involving related-party transaction (RPT) violations by paying ₹4.12 crore under SEBI’s settlement mechanism.

WHAT TRIGGERED SEBI’S INVESTIGATION

A March 2023 examination report by the National Stock Exchange (NSE) flagged investments by Kalyani group entities into promoter-linked companies with weak financials, nil operations, and negative net worth.

Some investments were impaired shortly after being made, raising concerns about fund utilization and governance.

WHAT WAS THE CORE ISSUE?

SEBI examined whether:

·       Proper Audit Committee approvals were obtained

·       Required shareholder approvals were taken where applicable

·       Adequate disclosures were made under Listing Regulations

·       RPT norms were complied with consistently over multiple financial years

·       Without admitting or denying the findings, the entities opted for settlement under SEBI’s settlement mechanism — effectively closing the regulatory proceedings.

SEBI’S KEY FINDINGS

SEBI observed that:

·       Several related-party transactions were executed without prior approval of the audit committee or shareholders.

·       Required quarterly disclosures of material RPTs were not properly made to stock exchanges.

·       Summaries of RPTs were not placed before the audit committee as required under listing regulations

THE SETTLEMENT SNAPSHOT

Total Settlement Amount:	₹4.12 Crore
Kalyani Steels:	₹2.8 Crore
BF Utilities:	₹36.28 Lakh
Former CS & Compliance Officer:	₹95.55 Lakh

The case covered an extensive period — FY2010 to FY2022 — and revolved around alleged lapses in approvals and disclosures concerning Related Party Transactions (RPTs).

KEY TAKEAWAY

·       This SEBI’s order highlights that liability can extend beyond the company and promoters to compliance officers if they fail to ensure regulatory compliance and disclosure obligations

·       RPTs must obtain prior Audit Committee approval, and in many cases shareholder approval.

·       Companies must ensure timely stock exchange disclosures and maintain proper internal oversight mechanisms.

·       For Company Secretaries and compliance professionals, this isn’t just a news item. It’s a reminder that RPT compliance is a boardroom priority — and a personal responsibilit

YOUR COMPLIANCE PARTNER – R V SECKAR , FCS, LLB 79047 19295