Shubhlaxmi Jewel Art Promoters Fined ₹10 Lakh by SEBI over Takeover Norm Breach

Moneylife Digital Team 22 May 2026

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of ₹10 lakh on eight promoter and promoter-group entities of Shubhlaxmi Jewel Art Ltd for violating takeover regulations by failing to make a mandatory open offer after increasing their shareholding beyond the permissible threshold. The penalty is to be paid jointly and severally by all eight noticees.

The noticees are promoter entities, including Narendrasinh J Chauhan, Soham Narendrasinh Chauhan, Ranjitsinh Gambhirsinh Solanki, Jagrutiben N Chauhan, Jignasha Ranjitsinh Solanki, Vilasben Ashokkumar Parmar, Kajal Jitendrakumar Chauhan and Jitendrakumar J Chauhan.

In an order, Amit Kapoor, adjudicating officer (AO) of SEBI, found that the promoter group had violated Regulation 3(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

The case relates to the conversion of 1.8mn (million) warrants into equity shares by promoter Narendrasinh Chauhan. According to SEBI, the board of Shubhlaxmi Jewel Art approved the allotment of 2.3mn convertible warrants on a preferential basis in November 2021, of which 1.8mn warrants were allotted to Narendrasinh Chauhan. In May 2023, the company approved the allotment of 1.8mn equity shares following the conversion of these warrants.

SEBI observed that the promoter and promoter-group shareholding increased from 65.71% to 71.53% after the allotment, resulting in an increase of 5.82%, which exceeded the 5% creeping acquisition limit prescribed under takeover regulations.

Under Regulation 3(2) of the SAST Regulations, any acquirer holding 25% or more shares in a listed company is required to make an open offer if any additional acquisition during a financial year exceeds 5%.

SEBI noted that despite the increase in shareholding breaching the prescribed threshold, the promoters failed to make the mandatory open offer to public shareholders.

The promoter entities argued that the preferential allotment was intended to support the company during financial distress and claimed that public shareholders had benefited, as the share price later rose from the warrant issue price of ₹14 to ₹28. They also contended that only Narendrasinh Chauhan received the warrants and that the other promoter-group entities had no direct role in the acquisition.

However, SEBI rejected these submissions, stating that all promoter-group entities were deemed to be persons acting in concert (PACs) under the takeover regulations. The regulator said the obligation to make an open offer becomes mandatory once the acquisition threshold is crossed, regardless of the transaction's intent or any subsequent benefits to shareholders.

While imposing the penalty, SEBI noted that there was no quantifiable evidence of disproportionate gains or investor losses and that the noticees had not previously been penalised for similar violations. Nevertheless, the regulator said a penalty was necessary to ensure compliance with takeover regulations and deter future violations.

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