Voting rights and corporate benefits of promoters and directors of Adani Ports, BGR Energy Systems, Tata Teleservices and Videocon among others, have been frozen. SEBI has also warned of levying monetary penalties, initiation of criminal proceedings, restricting trading activities of related stocks, etc
Market regulator Securities and Exchange Board of India (SEBI) has cracked the whip on 105 companies including Adani Ports, BGR Energy Systems, Tata Teleservices and Videocon for not complying with the mandatory 25% public holding (minimum public shareholding-MPS) norms. Out of the 105 non-compliant companies, 33 are suspended by the stock exchanges.
SEBI's whole time member, in an order issued late last night had frozen voting rights and corporate benefits of promoter, promoter group and directors of these companies, until they comply with the minimum shareholding norm.
The market regulator has also prohibited promoter, promoter group and directors of these non-compliant companies from buying, selling and dealing in the company shares in any manner. In addition, SEBI has restrained them from holding any new position as a director in any listed company, till they follow the norms.
In a 13-page order issued late last night, SEBI also warned of further actions, including levy of monetary penalties, initiation of criminal proceedings, restricting the trading activities of related stocks and other possible directions.
The companies whose promoters and directors would face prohibitory orders include Adani Ports, BGR Energy Systems, Videocon Industries and Tata Teleservices.
The guidelines issued on 4 June 2010 by the finance ministry make it mandatory for Indian companies to have a free float of at least 25% before 3 June 2013. State-run companies or public sector units (PSU) too have to comply with these guidelines by 8 August 2013. Market regulator SEBI had clearly said that the deadlines would not be extended.
On 4 June 2010, the finance ministry amended the Securities Contracts (Regulation) Rules, 1957 (SCRR), raising the MPS requirement to 25% for listed companies or those that proposed to list. Listed companies that did not meet the MPS norm would be required to increase public shareholding by at least 5% a year until they met the norm. On 9 August 2010, the SCRR was amended again to revise public-sector companies' MPS norms to 10% (from 25%) within three years from August 2010.
According to BNP Paribas Securities (Asia), these guidelines have created an asymmetrical situation between sellers of equity i.e. company promoters and potential buyers or secondary market investors. “The promoters have to sell by a certain date, but the buyers are not forced to buy. In fact, secondary market investors may not even be interested in buying the equities of many of the companies. This, in our view, creates downside risk to the share prices of companies that need to increase free float,” the brokerage said in a research note.
As of May 2013, the market had seen 44 offers for sale (OFSs) and eight institutional placement programmes (IPPs) worth $9 billion. SEBI has allowed companies to take either one of the routes—follow-on public offers (FPOs), OFS, IPP or bonus, rights issues—to comply with the revised norms. A company wanting to take any other route must take SEBI's permission before doing so.
Here is the list of companies against which SEBI had issued the order...
The Real Estate (Regulation and Development) Bill seeks to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities
A Bill providing for setting up a regulator for the real estate sector and having provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly was approved by the government on Tuesday.
The Real Estate (Regulation and Development) Bill, approved by the Cabinet, seeks to provide a uniform regulatory environment to the sector.
It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities.
Builders and developers who become repeat offenders may even face a jail term of up to three years.
The Bill makes it mandatory for builders to clarify the carpet area of the flat. This would be made uniform for the entire country. This rule would make the concept of super area—which is often used to mislead owners—virtually non-existent.
The Bill has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction, sources said.
The proposed legislation has tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of the actual site.
Failure to do so for the first time would attract penalty which may be up to 10% of the project cost and a repeat offence could land the developer in jail.
The ministry of housing and urban poverty alleviation is working on bringing all projects under a single-window clearance. While the Airports Authority of India and municipal bodies have come on board, there are some objections from the environment ministry which are being looked into.
The ministry sources said 22 states had given their approval to the Bill while five states wanted certain amendments. These changes have been incorporated in the Bill cleared by the Cabinet, sources said. Chhattisgarh is the sole state to still oppose the Bill.
Builders and developers will have to get all clearances—from title deed to project cost—cleared before construction begins. FAR (Floor Area Ratio) will also have to be specified clearly by the builder.
While the regulator in the states will be appointed by the state governments, in Delhi the urban development ministry will appoint the regulator. DDA is likely to be made the regulator in Delhi, sources said.
The Regulator will also be the appellate authority in cases of dispute. This will save the owners the hassle of running around to different authorities for redressal.
The developers will also have to specify the common area in the society. The term ‘apartment’ has been specified in the Bill and will include the space to be provided for a garage.
The information sought by Lokeshwar Dev included copies of complaints against him, and also other details including SEBI’s opinion and clarifications on matters concerning the case
In an unusual use of the Right to Information (RTI) route, the main accused of over Rs 1,500-crore ‘StockGuru’ scam has tried to get complaints and other information against him with the Securities and Exchange Board of India (SEBI), but his request has been rejected.
The information sought by Lokeshwar Dev, who is said to have used different names, including that of Ulhas Khaire, for different fraudulent schemes, included copies of complaints against him, and also other details including SEBI’s opinion and clarifications on matters concerning the case.
Not satisfied with SEBI’s response to his RTI (Right to Information) query, Ulhas approached the regulator's Appellate Authority in April this year, but his appeal was dismissed through an order passed yesterday.
Lokeshwar Dev and his wife Priyanka Dev, both of whom have used numerous names and were arrested by Delhi Police's Economic Offences Wing in November last year, are facing a multi-agency probe for allegedly duping lakhs of investors of more than Rs1,500 crore.
The agencies probing the matter include CBI and the Enforcement Directorate (ED), while SEBI passed an order in January this year against the couple and other entities associated with them, wherein they were barred from the capital markets for ten years and were asked to refund the money collected fraudulently from the gullible investors.
The entities floated by the two for their dubious schemes included Stock Guru India (SGI), SGI Research and Analysis and StockGuru.com.
Subsequently, SEBI in March this year received an RTI application from Ulhas or Lokeshwar Dev, seeking replies to his 27 queries related to his company, SGI Research and Analysis.
SEBI replied to the RTI query on 3rd April, but the appellate filed an appeal with the Appellate Authority on 15th April against SEBI’s response and said that the information given by the regulator was “incomplete and incorrect” and not what he was seeking for.
“I feel they (SEBI) are deliberately and intentionally hiding the information so that justice is denied to me,” he said in his appeal.
Hearing his petition, the Appellate Authority said that SEBI had told Ulhas that “the information sought by him was in the nature of seeking opinion/clarification/explanation from SEBI and did not fall within the definition of 'information' as defined under the RTI Act”.
The Appellate Authority also concurred with SEBI’s view that said that the information sought in 19 out of the total 27 queries were indeed “in the nature of seeking clarification, opinion, explanation, etc from SEBI” and therefore the regulator cannot be obliged to provide a response to such request for information through RTI.