In the matter of Nagarjuna Agrichem Limited
- Order No.WTM/PS/CFD/20/JULY/2013
Ratio decidendi
The rule this decision rests on
A listed company that is shown to have reached the minimum public shareholding required by rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957 by the prescribed compliance date has complied with those norms, even though it did so on the last day. Allotting bonus shares to public shareholders, which raises public shareholding to the required level, is a method of achieving that compliance. Where a company has complied with the minimum public shareholding norms, the directions issued against it, its directors, promoters and promoter group under an interim order for non-compliance are revoked under section 19 of the SEBI Act, 1992.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
WTM/PS/CFD/20/JULY/2013 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM : PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under section 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 Nagarjuna Agrichem Limited
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had passed an ad interim order dated June 04, 2013 (hereinafter referred to as "the interim order ") with respect to 105 listed companies who have not complied 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. Nagarjuna Agrichem Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The shares of the Company are listed on the Bombay Stock Exchange Limited ("BSE").
3. The Company filed its reply dated June 17, 2013 to the interim order. An opportunity of personal hearing was afforded to it on July 08, 2013, when Mr. R.K.S. Prasad, Chief Financial Officer and Mr. Satish K. Subudhi, Company Secretary and Head-Legal of the Company appeared and made submissions.
4. I have considered the reply of the Company, the oral submissions made in the personal hearing and the documents submitted before me. The Company has submitted that it has allotted bonus shares only to its public shareholders on June 03, 2013, which had consequently increased the public shareholding to 25.187%. It is the contention that the Company was compliant with the Minimum Public Shareholding ("MPS") norms on June 03, 2013.
5. During the personal hearing, the representatives of the Company had submitted copies of Form 2 (return of allotment with respect to the bonus shares), Company's letter dated June 03, 2013 to BSE informing the allotment of the bonus shares and the Company's letter dated June 04, 2013 to the BSE requesting listing approval for the bonus equity shares allotted to the public shareholders. I have perused the documents and note from such records that the Company has allotted 69,29,938 bonus equity shares on June 03, 2013 to 9,446 public shareholders. Pursuant to this allotment, the promoter shareholding in the Company has reduced from 78.29% to 74.813%. The public shareholders presently hold 25.187%. From the above, it is noted that the Company has complied with the MPS norms on June 03, 2013, i.e., the last date prescribed for compliance. In the personal hearing, the representatives had stated that the above letters were sent to BSE through courier service. The Company had a notice of three years to comply with the MPS norms but it waited till the very last day to take final steps for achieving the same. Having achieved compliance on the last day, the Company should have been equally serious in disseminating timely information regarding its compliance to SEBI and the BSE through faster communication modes like e-mail, facsimile message, etc.
6. Considering the fact that the said company has complied with the minimum public shareholding norms, 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 revoke the directions issued vide the interim order dated June 04, 2013 against the company, Nagarjuna Agrichem Limited, its directors, promoters and promoter group, with immediate effect.
7. 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.
PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date : July 26, 2013 Place : Mumbai
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