Khemani Distributors and Marketing, Associated Entities Fined Rs20 Lakh for Regulatory Violations

Moneylife Digital Team 11 March 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs20 lakh on Khemani Distributors and Marketing Ltd (KDML) and the company's five associated entities for multiple regulatory violations. These violations include misclassifying promoter group entities, incorrect shareholding disclosures and delays in making mandatory open offer announcements under SEBI regulations.

The other entities penalised by SEBI are Gryffin Advisory Services Pvt Ltd (GASPL), BSAS Infotech Ltd, ONYX Partners, Vijaykumar Mangturam Khemani Hindu undivided family (HUF) and Vijaykumar Khemani.

In an order, Asha Shetty, the adjudicating officer (AO) of SEBI, stated, "The efforts undertaken by Khemani Distributors and Marketing, and the circumstances illustrated by the noticees are considered as mitigating factors. However, since the noticees are found to be in non-compliance with regulatory requirements, a monetary penalty is imposed as an effective deterrent."

SEBI examination revealed that GASPL was wrongly classified as a public shareholder from June 2017 to September 2023 instead of being listed under the promoter group. Additionally, BSAS Infotech, ONYX Partners and Vijaykumar Khemani HUF were omitted from promoter group disclosures in shareholding patterns for FY17-18 to FY21-22.

These inaccuracies led to misleading representations of KDML's shareholding structure, violating Regulation 31(1)(b) of SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015 and SEBI circular issued on 30 November 2015.

Furthermore, SEBI says the acquirers and persons acting in concert (PACs) failed to make timely public announcements for open offers despite triggering events occurring on specific transaction dates. Notably, GASPL's acquisitions on 30 June 2017 and 13 January 2021 exceeded the 5% threshold, necessitating open offers that were not promptly announced.

Similar delays occurred with acquisitions involving BSAS Infotech, ONYX Partners, Vijaykumar Mangturam Khemani HUF and Vijaykumar Khemani, resulting in non-compliance with Regulations 13 and 25(5) of the SAST Regulations, 2011.

SEBI determined that the prolonged misclassification and delayed open offer announcements were not merely technical lapses but indicated systemic failures in compliance and internal oversight mechanisms. The argument that frequent changes in the company secretary position led to these lapses was deemed insufficient, as the ultimate responsibility for regulatory compliance rests with KDML as a listed entity.

Consequently, SEBI imposed a Rs10 lakh penalty on KDML, and its associated entities GASPL, BSAS Infotech, ONYX Partners, Vijaykumar Mangturam Khemani HUF and Mr Khemani were penalised Rs10 lakh jointly and severally.

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