The entities penalised by SEBI include: Sangeetaben Niteshbhai Vaghasiya, Nitesh Parshottambhai Vaghasiya, Artiben Pankajkumar Shingala, Nitaben Pravinbhai Shingala, Nitesh P Vaghasiya (HUF), Parshottambhai Laljibhai Vaghasiya, Yogeshbhai Govindbhai Ramani, Govindbhai Karsanbhai Ramani, Arvindbhai Parshotambhai Vaghasiya, Ramnik Parsotambhai Vaghasiya, Jayaben Parshotambhai Vaghasiya, Pravinkumar Hardasbhai Shingala, Muktaben Govindbhai Ramani, Vasantbhai Hardasbhai Shingala, Pankaj Vasantbhai Shingala and Niteen Bhikhubhai Khatra.
SEBI examined Ultracab's shareholding disclosures after observing a substantial decline in the aggregate holdings of its promoters and promoter group. According to the order, their combined shareholding stood at 62.12% at the beginning of the September 2023 quarter, fell to 59.69% at the end of that quarter and declined further to 27.90% by December 2023. The promoter and promoter-group shareholding therefore changed by 2.44% in the September quarter and 31.80% in the December quarter.
SEBI noted that the promoter and promoter-group entities were deemed to be persons acting in concert (PACs) under Regulation 2(1)(q) of the SAST Regulations. Since their aggregate shareholding changed by more than 2%, disclosures were required under Regulation 29(2) read with Regulation 29(3). However, the stock exchange confirmed that the required disclosures had not been received in 12 instances.
Regulation 29(2) requires a person holding 5% or more shares or voting rights, together with persons acting in concert, to disclose changes in shareholding exceeding 2% of the total shareholding or voting rights. Under Regulation 29(3), such disclosures have to be made to the stock exchanges and the company within two working days of the acquisition or disposal.
The entities argued that the non-filing was unintentional and that they believed the depository would make the necessary disclosures under the system-driven disclosure mechanism. They also contended that details of the share transactions were already available in the public domain through the stock exchange and that the lapse was technical. They further submitted that there was no wrongful gain, unfair advantage, or loss to investors, and that this was their first instance of non-compliance.
SEBI rejected these arguments, observing that the 7 March 2022 circular on system-driven disclosures specifically required manual disclosures for transactions triggering Regulation 29 requirements. The regulator said promoters and promoter-group members are deemed PACs unless the contrary is established. The entities had not provided evidence to rebut this presumption.
SEBI also rejected the defence that the violation was merely technical or that the entities were unaware of their disclosure obligations. Referring to the established legal principle that ignorance of the law is no excuse, the adjudicating officer held that the explanation based on reliance on the depository could not be accepted.
The entities had also sought the dropping of proceedings against some members who claimed that they had not sold any shares during the relevant period. SEBI, however, noted that certain individuals remained part of the promoter and promoter group and, as persons acting in concert, were required to disclose changes in aggregate shareholding even if they themselves had not sold shares.
At the same time, SEBI accepted the submissions of Kanchanben Shingala, Vasantbhai H Shingala (HUF) and Pravinkumar Shingala (P). Their names did not appear among the promoters in the relevant annual reports, and they had nil shareholding during the relevant period. The proceedings against these three entities: were therefore dropped.
Similarly, proceedings against Gopalbhai Shingala were not sustained. SEBI noted that he had transferred his entire holding of 72,000 Ultracab shares in January 2021 and had no shareholding during the June, September and December 2023 quarters. His name was also not included among the promoters in the relevant annual reports.
SEBI, therefore, held 16 entities liable for violating Regulation 29(2) of the SAST Regulations. While determining the penalty, the regulator noted that the material on record did not quantify any disproportionate gain or unfair advantage to the entities or any loss caused to investors. There was also no evidence that the violation was repetitive
However, SEBI said the failure to make the mandated disclosures could not be ignored and warranted a suitable penalty. Accordingly, SEBI imposed a ₹5 lakh penalty jointly and severally on the entities.
