In an order, N Murugan, chief general manager (CGM) and designated quasi-judicial authority of SEBI said, "Given the grave nature of the violations established in this order, whereby minimum public shareholding requirements were artificially met through funding of certain entities to acquire shares of the Company and such entities were thereafter disclosed as public shareholders, I find that the misconduct goes to the root of market integrity, transparency, and investor protection. The resultant misrepresentation of the shareholding pattern misled investors and the market at large regarding the true ownership structure and the Company’s compliance status.
Omaxe was listed on the NSE and BSE on 9 August 2007. SEBI investigated whether the company had complied with the prescribed 25% MPS requirement. The investigation examined transactions involving the company, its promoters and connected entities, including the 2013 offer-for-sale (OFS) transactions.
According to SEBI's findings, ₹46.50 crore originating from Omaxe and group entities was routed through DVM Realtors Pvt Ltd (DRPL), Garv Buildtech Pvt Ltd and Jeet Builders Pvt Ltd (JBPL) before ultimately being used to acquire Omaxe shares in the 3 June 2013 and 29 October 2013 OFS. Of this amount, ₹13 crore moved through Garv Buildtech, while ₹33.50 crore was routed through DRPL.
SEBI noted that the fund trail was significant because Garv Buildtech was a wholly owned subsidiary of Guild Builders, a promoter of Omaxe. DRPL was identified in Omaxe's FY13-14 annual report as an entity over which Omaxe's key managerial personnel (KMP) or their relatives exercised significant influence. SEBI also found links between JBPL and persons associated with the Omaxe group.
The funds were subsequently transferred to several entities and ultimately used for subscribing to Omaxe shares. In the 3 June 2013 OFS, the identified entities were allotted 28.50 lakh shares, while another 4.92 lakh shares were allotted to such entities in the 29 October 2013 OFS. In aggregate, the entities acquired 33.42 lakh Omaxe shares through the two OFS tranches.
SEBI found that the shares acquired through the established fund trail could not be treated as representing independent public shareholding. Consequently, the reported public shareholding of 16.21% after the June 2013 OFS was reduced to about 14.57%, while the 20.97% reported after the October 2013 OFS was reduced to about 19.04%. Even after the subsequent bonus issue, the public shareholding would have been about 22.71%, rather than the reported 25.01%. SEBI, therefore, held that Omaxe had failed to achieve the prescribed 25% MPS through genuine public shareholders.
SEBI also held that the ₹46.50 crore fund trail amounted to indirect financial assistance by Omaxe for the acquisition of its own shares. Since the transactions took place in 2013, the regulator found Omaxe in violation of Section 77(2) of the Companies Act, 1956, which prohibited a public company from providing financial assistance, directly or indirectly, for the purchase or subscription of its own shares.
The regulator further found that the funded entities' holdings had been disclosed as public shareholding even though the shares did not represent independent public ownership. SEBI held that the resulting shareholding disclosures were misleading and that Omaxe and the concerned promoters violated the applicable disclosure and MPS provisions. The order also establishes violations under the SEBI Act and PFUTP Regulations relating to the fraudulent and deceptive scheme alleged in the matter.
SEBI, however, did not sustain every allegation contained in the show-cause notice (SCN). In particular, the regulator found that the material was insufficient to establish that the approximately ₹7.32 crore received by Vimal Kumar Gupta and his family from JBPL/Omaxe related entities was provided for acquiring or trading in Omaxe shares. The order noted that the fund flows could not be matched recipient-wise and transaction-wise with subsequent share acquisitions.
Similarly, SEBI did not find sufficient evidence to establish the allegation against five other entities, Rapid Credit and Holdings Pvt Ltd, RK Stock Holding Pvt Ltd, Sumpoorna Portfolio Ltd, Narayan Securities Ltd and Narayan Commodity Brokers Pvt Ltd, that they were controlled by Omaxe's promoters. The regulator noted the lack of sufficient evidence linking their acquisition of Omaxe shares to Omaxe's funding.
SEBI also found insufficient evidence to attribute the violations individually to Sushma Goel and Seema Goel. The order states that no material established their specific role in the ₹46.50 crore fund trail or their involvement in the relevant OFS transactions.
Under the final directions, SEBI imposed the following penalties:
SEBI also restrained Omaxe from accessing the securities market for three months, while Rohtas Goel, Sunil Goel, Jai Bhagwan Goel, Dream Home Developers and Guild Builders were restrained for one year. The restrictions cover buying, selling or otherwise dealing in securities, including mutual fund units, directly or indirectly, or being associated with the securities market in any manner.
SEBI said the violations affected the accuracy of the company's shareholding disclosures and deprived investors of accurate information regarding Omaxe's ownership structure and regulatory compliance. While the order found no directly quantifiable monetary loss to investors, it held that the dissemination of incorrect shareholding information was prejudicial to investor interest.
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