In the matter of Monotype India Limited- minimum public shareholding requirement

WTM/PS/22/CFD/JULY/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 requirement of minimum public shareholding by listed companies

In respect of Monotype India Limited

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had 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. Monotype India Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The equity shares of the Company are listed on the Bombay Stock Exchange Limited ("BSE") and the Calcutta Stock Exchange Limited.

3. Though the interim order advised the Company, its promoters and directors that they may file replies and also seek an opportunity of personal hearing, it is noted that the noticees failed to submit any reply to the observations and allegations made in the interim order. In the interest of justice, the Company was afforded an opportunity of personal hearing on June 26, 2014. On the date of the hearing, the Company was represented by Mr. Ramesh Chandra Mishra, Practicing Company Secretary, who inter alia submitted that a 'Scheme of Arrangement' was filed by the Company before the Hon'ble High Court at Calcutta for approval. The representative also sought liberty to file written submissions along with supporting documents in the matter.

4. Thereafter, vide letter dated June 30, 2014 (received in SEBI on July 11, 2014), the Company, while requesting SEBI to vacate the prohibition imposed on the promoters from dealing in the securities market, inter alia stated the following : (i) The management of the Company was taken over by way of open offers and because of the same, the promoter's shareholding increased from 74.22% to 75.27%. (ii) The Company has preferred a Scheme of Arrangement i.e., merger, which is presently pending for final orders before the Hon'ble Calcutta High Court. (iii) On sanction of the Scheme, the promoter's shareholding would be reduced to 23.32%.

5. The interim order was issued against the Company as it was non-compliant with the provisions of rule 19A of the SCRR and Clause 40A of the Listing Agreement read with section 21 of the Securities Contract (Regulation) Act, 1956 ("SCRA"), by not maintaining atleast the minimum level (of 25%) of public shareholding as of June 03, 2013 (the time line before which such compliance was to be achieved). The amended provisions of rules 19A of the SCRR came into force with effect from June 04, 2010, offering a time period of three years (i.e., on or before June 03, 2013) for a listed company to maintain public shareholding of atleast 25%.

6. As per the shareholding pattern of the Company for the quarter ended March 2014, as available in the website of the BSE, it is noted that the promoters hold 75.27% equity shares and the public shareholders hold 24.73%. This public shareholding is at a level slightly below minimum public shareholding norms as stipulated by the aforesaid statutory provisions. The public shareholding remained at this level from June 2013. Even after passing of the interim order, the Company has not taken any steps to comply with the MPS requirement.

7. I note that though the Company submitted, through its authorised representative and vide letter dated June 30, 2014, that it has filed a 'Scheme' before the Hon'ble High Court, it neither furnished any documents nor made any submissions in this regard. Further, this proceeding is only with respect to the compliance or not by the Company with the MPS requirements and not with respect to its capital restructuring or mergers.

8. In view of the above, I hereby find that the Company has failed to comply with the MPS requirements prescribed vide such statutory provisions within the stipulated timeline. The Company is also in continuous violation of these norms.

9. Considering the above violations of the Company and the continuous nature of such violations, it becomes necessary for SEBI, for proper regulation of the securities market, to confirm the directions issued against the Company, its directors and promoters/promoter group. Further, for such contravention, SEBI may also initiate other action, as appropriate in law, against the Company, its directors and promoters.

10. Accordingly, 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 confirm the directions issued vide the interim order dated June 04, 2013 against the company, Monotype India Limited, its directors, promoters and promoter group.

11. This Order shall remain in force till further directions.

12. Copy of this Order shall be served on the stock exchanges and depositories for their information and necessary action.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : July 22nd, 2014 Place : Mumbai