Securities and Exchange Board of India (SEBI) has slapped a penalty of Rs 25 crore on Mukesh Ambani, Anil Ambani, and nine other individuals and entities in connection with irregularities in shareholding emerging from violation of regulator's takeover code regulations.
Back in January 2020, promoter stake in Reliance Industries increased by 6.83 per cent after conversion of 3 crore warrants issued in 1994. However, it was alleged that the promoter group failed to make an open offer in accordance with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997.
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As per extant regulations, a promoter group acquiring more than 5 per cent stake needs to make an open offer to minority investors within the ongoing financial year. In its order SEBI mentioned that the promoter group and other noticees in the case violated regulation 11(1) of takeover regulations.
"It is noted that in the instant matter the noticees have been alleged to have failed to make public announcement to acquire shares of RIL and deprived the shareholders of their statutory rights/opportunity to exit from the target company and therefore they breached the provisions of takeover regulations. Such charges against the noticees make the instant matter grave," SEBI ruled.
In its verdict, SEBI imposed a fine of Rs 25 crore on Mukesh Ambani, Anil Ambani, Kokilaben Ambani, Nita Ambani, Tina Ambani, Reliance Industries Holding, Reliance Realty and others. The fine has to be paid jointly and severally, the market regulator ordered.
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"In the event of failure to pay the said amount of penalty within 45 days of the receipt of this order, SEBI may initiate consequential actions including but not limited to recovery proceedings under section 28A of the SEBI Act, 1992, for realisation of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties," ruled SEBI.
SEBI clarified that it is unable to assess the unfair gains or advantage promoters reaped by violating takeover regulations. The regulator, however, maintained that the promoters denied minority investors their statutory rights.
"...no quantifiable figures or data are available on record to assess the disproportionate gain or unfair advantage and amount of loss caused to an investor or group of investors as a result of the default committed by the noticee. However, the fact remains that the noticees by their failure to make public announcement, deprived the shareholders of their statutory rights/ opportunity to exit from the company," SEBI said in its order.
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