In the matter of Kanumanek Trading Company Limited- minimum public shareholding requirement

WTM/PS/75/CFD/FEB/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under sections 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with section 12A of the Securities Contracts (Regulation) Act, 1956 in the matter of non-compliance with the minimum public shareholding requirements

In respect of Kanumanek Trading Company Limited

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') passed an interim order dated June 04, 2013 (hereinafter referred to as 'the interim order') with respect to 105 listed companies who did not comply with the Minimum Public Shareholding ('MPS') norms as stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as 'SCRR') within the due date i.e., June 03, 2013. The interim order was passed without prejudice to the right of SEBI to take any other action, against the non-compliant companies, their promoters and/ or directors or issuing such directions in accordance with law. The interim order was to be treated as a show cause notice by those companies for action contemplated in paragraph 18 thereof.

2. Kanumanek Trading Company Limited (hereinafter referred to as 'the Company') is one such company against whom the interim order was passed. The promoter shareholding in the Company on the date of the interim order was 97.71%. The shares of the Company are listed on the Bombay Stock Exchange Limited ('BSE').

3. The Company filed its replies to the interim order vide letters dated June 11, 2013 and September 10, 2013. Thereafter, an opportunity of personal hearing was afforded to the Company on January 23, 2014, when Mr. R. Vaidyanathan, Director of the Company appeared along with Mr. Somasekhar Sundaresan (Advocate), Mr. Gagan Sharma, Associate, J. Sagar Associates and made oral submissions. The submissions of the Company inter alia are as follows: a. The Company's promoters Ms. Amitha Sheth and Ms. Jyoti Sheth had expressed their intention, vide letter dated March 25, 2013, to delist the equity shares of the Company from the stock exchanges in accordance with the provisions of the SEBI (Delisting of Equity Shares) Regulations, 2009 (the 'Delisting Regulations').

b. The Board of Directors of the Company in their meeting held on March 28, 2013 had approved the resolution of authorising the delisting of the shares. c. Thereafter, the postal ballot process for seeking approval of the public shareholders of the Company for delisting of shares was completed and the scrutinizer vide its report dated May 10, 2013, has reported that the resolution has been approved with requisite majority. d. On receipt of the scrutinizer's report, the Company had published the results of the postal ballot in the newspapers on May 15, 2013. e. The Company has also received 'in principle' approval for the delisting of the equity shares of the Company from BSE on June 05, 2013.

In view of the submissions, the Company therefore requested SEBI to waive off the operation of the interim directions and allow it to complete its already initiated delisting process. The representatives of the Company also requested SEBI to grant atleast a period of four (4) months to complete the delisting process.

4. I have considered the reply and the submissions made by the Company and the material available on record. The shareholding of the promoter and the promoter group in the Company is at 97.71% and the public shareholders holds 2.29%. The Company has desired to delist the shares of the Company in terms of the Delisting Regulations. I note from the submissions of the Company that the voluntary delisting has been approved and the resolution thereof has been passed by its shareholders.

5. Considering the promoter's intention to delist the shares of the Company, the approval of the board of directors with respect to such proposal for delisting and the approval of the shareholders through postal ballot favouring the proposal for delisting, I am of the view that the Company be permitted to delist its shares in accordance with the provisions of the Delisting Regulations. The Company has also submitted that the directions passed vide the interim order has restricted the Company's promoter from moving ahead with their acquisition of shares in the delisting process and requested to modify the interim order so as to enable the Company/ its promoter to proceed with the delisting process. I find it reasonable and appropriate to modify the directions issued vide the interim order to the extent that the same does not affect or prejudice the efforts of the Company/ its promoters from continuing with the voluntary delisting process.

6. In view of the foregoing, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11(1), 11(2)(j), 11(4) and 11B thereof and section 12A of the Securities Contracts (Regulation) Act, 1956, hereby issue the following directions which are in modification of the directions issued vide the interim order dated June 04, 2013 :

(i) The direction issued in paragraph 17(b) of the interim order dated June 04, 2013 stands modified to the extent that it shall not hinder the already commenced voluntary delisting process initiated by the Company, Kanumanek Trading Company Limited and that Ms. Amitha Sheth and Ms. Jyoti Sheth (promoters of the Company) shall be permitted to buy the equity shares from the public shareholders as part of the delisting offer. The Company shall complete the delisting process by May 14, 2014 and shall report the outcome within one (1) months' period from the date of delisting. (ii) The direction contained in 17(b) of the interim order dated June 04, 2013 shall be re-imposed/ revived immediately (without the need for passing of a separate order) in case the delisting process of the Company is not successful within the period directed in sub paragraph (i) above. (iii) The directions contained in paragraphs 17(a), (c) and (d) of the interim order dated June 04, 2013 shall continue to be in effect till such time the Company is delisted from the stock exchanges or till the time the Company becomes compliant with the MPS norms, whichever is earlier.

7. This Order shall come into force with immediate effect.

8. The aforesaid directions are issued without prejudice to the right of SEBI to initiate action as contemplated in paragraph 18 of the interim order in case the delisting process of the Company is not successful within the period as directed in paragraph 6(i) above.

9. Copy of this Order shall be served on the stock exchanges and depositories for their information and action that may deem fit and necessary in this case.

PLACE: Mumbai PRASHANT SARAN DATE: February 10th, 2014 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA