SEBI Imposes Rs2 lakh Fine on Ascom Leasing & Investment over Misclassification in Promoter Group
Moneylife Digital Team 13 June 2024
Securities and Exchange Board of India (SEBI) has levied a fine of Rs2 lakh following an adjudication order scrutinising the trading practices of specific entities associated with Ascom Leasing and Investments Ltd (noticee). This order investigates explicitly the misclassification of Saffron Hitech Equipment within Ascom Leasing's promoter group.
In an order, Barnali Mukherjee, adjudicating officer (AO) of SEBI, says, "I note that if any person who is to file correct shareholding pattern, files wrong shareholding details and is depriving the investing public of the statutory rights available to them, then SEBI is duty bound to ensure that the investing public are not deprived of any statutory rights available to them. Timely, accurate and proper disclosure or filing is cornerstone of good corporate governance. Hence, non-classifying of Saffron as a promoter group and incorrect filing of shareholding pattern by the noticee as brought out in the preceding paragraphs clearly shows the violation committed by it and calls for appropriate penalty".
SEBI, during investigation, observed that Ascom Leasing, submitted several key points. Ascom Leasing submitted that Saffron became a shareholder in January 2022, purchasing 60,000 shares between 17 January and 21 January 2022. Saffron currently holds 102,000 shares, representing 0.87% of Ascom Leasing's paid-up equity share capital. During a statement recording at SEBI, one Tushar Pandya acknowledged that Saffron was a shareholder and he is a promoter of Saffron. However, he clarified that he did not start Saffron but acquired it from another group of shareholders.
Further, Ascom Leasing informed the National Stock Exchange (NSE) on 4 June 2024 of oversight and committed to correctly classify Saffron as a constituent of the promoter group, intending to disclose this in the shareholding pattern to be filed for the half-year ending 30 September 2024. 
Ascom Leasing argued that Regulation 31(1) of the LODR Regulations is not applicable in this case since they had submitted the shareholding pattern in the specified format and within the timelines set by SEBI, including Saffron in its shareholding. It further argued that Regulation 31(1) pertains to the timeliness and accuracy of the shareholding pattern submission, which they complied with.
Additionally, Ascom Leasing claimed that the sub-classification and bifurcation of the shareholding pattern between promoter or promoter group members and the public are governed by Regulation 31(4) of the LODR Regulations, not Regulation 31(1). 
It maintained that the misclassification of Saffron as a promoter or promoter group shareholder was a bona fide oversight, emphasising that Saffron was disclosed as a related party in its annual reports for FY21-22 and FY22-23. It also noted that no investor had suffered any loss or raised grievances related to this misclassification and that the small holding of Saffron did not materially affect investor decisions.
On reviewing the charges, Ascom Leasing's reply and the available documents and materials, SEBI considered several issues. The first issue was whether the Ascom Leasing violated the provisions of SCRA and LODR Regulations. It was observed that Mr Pandya and his wife, Rupalben Pandya, held 800 and 200 shares, respectively, in Saffron, making them promoters with 100% shareholding in Saffron. 
"As they were also promoters of Ascom Leasing, Saffron should have been classified as part of the promoter group according to Regulation 2(1)(pp)(iv)(A) of SEBI (ICDR) Regulations, 2018," the SEBI AO says.
SEBI's investigation, supported by comments from NSE, confirmed that Saffron should have been categorised as part of the promoter group. Ascom Leasing's failure to do so violated Regulations 31(1) and 31(4) of the LODR Regulations.
Ascom Leasing argued that the misclassification was a technical oversight and highlighted that Saffron was disclosed as a related party in the annual reports. However, SEBI maintained that this did not absolve the Ascom Leasing from correctly classifying Saffron in the shareholding pattern. 
Despite Ascom Leasing's assertion that no investor suffered losses due to the misclassification and that it was immaterial to investment decisions, the SEBI AO highlighted that accurate disclosure is crucial for market transparency and regulatory monitoring. Further, penalties for non-compliance are not dependent on actual investor losses but on the failure to fulfill regulatory obligations, the AO says.
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