In the matter of Premier Synthetics Limited- minimum public shareholding requirement

WTM/PS/74/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 requirement of minimum public shareholding by listed companies In respect of Premier Synthetics 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. Premier Synthetics 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").

3. The Company filed its reply vide letter dated June 24, 2013 to the interim order. An opportunity of personal hearing was afforded to the Company on July 31, 2013, when Mr. P.C. Surana (Auditor) and Mr. Janardan Doshi (Director of the Company) appeared and made submissions. During the hearing, the representatives submitted that the Company was compliant with the minimum public shareholding norms as of December 2012 and that the promoters' shareholding increased thereafter. It was also submitted that the Company is now compliant with the MPS requirement as its promoters have successfully reduced their holding to 74.89% by an Offer for Sale ("OFS") through the BSE on June 21, 2013. The representatives therefore requested SEBI not to take any further action against the Company as contemplated.

4. The Company also filed written submissions vide its letter dated September 02, 2013, wherein it inter alia submitted as follows : a) During 1998, the Company had raised loans from Oman International Bank S.A.O.G. ("Oman Bank") For this purpose, the promoters of the Company pledged part of their holding as collateral security. b) The Company incurred heavy losses and was under BIFR. The equity shares of the Company were suspended from trading by the BSE from September 10, 2001 till May 2011. c) Considering the circumstances, Oman Bank transferred the pledged equity shares in its name in September 2000, though the shares were pledged only as a collateral security. d) As the shares were transferred by Oman Bank in its name, the promoters' holding was reduced, though they were the real owners of those shares and did not sell the shares to the said entity. e) Oman Bank never exercised any rights or received any benefit as owner of the shares. Shares were transferred to Oman Bank in its name to safeguard its interest for securing the loan given by it to the Company. f) After a lot of litigations and negotiations, Oman Bank assigned their loan account to Edelweiss Assets Reconstruction Company Limited ("Edelweiss") during the year 2011 with all mortgage assets of the Company and also the equity shares held by them as collateral security. g) Edelweiss released these equity shares received by them from Oman Bank to the promoters during December 2012. h) On receipt of the shares, the same were transferred by the promoter shareholders in their name, resulting in the restoring and increasing of their shareholding and the BSE was accordingly informed by filing necessary documents. i) When the shares were transferred (to Oman Bank), the shareholding of the promoters was wrongly shown as reduced. The same was then correctly disclosed to the BSE on receipt of the shares.

The Company requested SEBI to condone the procedural lapses in that regard.

5. On inquiries made by SEBI with the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), it is understood that the Company has been admitted in CDSL on September 25, 2012 for providing the facility of dematerialisation to its shareholders and that it has not joined the NSDL system.

6. I have considered the submissions made by the Company including the documents submitted by it and those on record. I have perused the filings made by the Company with the BSE with respect to its shareholding pattern and note that the public shareholding was at 30.34% for the quarter ended December 2012 and the same was reduced to 18.79% as per the filing made for the quarter ended March 2013. The Company has submitted that the Oman Bank had transferred the shares pledged by the Company's promoters in its name, which was the reason for the reduction in the shareholding of the promoters. Thereafter, Oman Bank has assigned their loan account to Edelweiss. The Company has submitted that Edelweiss had released such shares to the promoters during 2012. The Company has further submitted that the shares were always owned by the promoters irrespective of their pledge to Oman Bank and the subsequent transfer of the shares in the name of Oman Bank.

7. Further, according to the Company, their promoters' shareholding was wrongly shown as reduced when the shares were transferred and that the promoter shareholding was corrected in the disclosures to BSE on receipt of those shares which were returned. In this regard, it is noted that pursuant to the transfer of shares to Oman Bank, the said entity was shown as a public shareholder of the Company in the respective filings made to the BSE.

8. As regards the compliance with the MPS requirement, I note that the promoters of the Company had made an OFS on June 21, 2013 and had reduced their shareholding to 74.89%. As per the disclosure of shareholding pattern filed with the stock exchange as on June 22, 2013, the public shareholders held 25.105% in the Company. Further, from the communication dated July 15, 2013, BSE has informed SEBI that the Company has achieved compliance with the MPS requirement and that the said fact is also noticed from the disclosures of shareholding pattern made to the BSE for the quarter ended June 2013. Therefore, it becomes an admitted fact that the Company was non-compliant with the MPS requirement as of June 03, 2013 and has achieved compliance belatedly on June 21, 2013. For such non-compliance with the MPS requirement on or before the due date stipulated under the SCRR, the Company is warned and is advised to ensure compliance with all the applicable laws and regulations administered by SEBI that govern its activities in the securities market. Considering the fact that the Company is now compliant with the stipulated minimum public shareholding level, I am of the opinion that the directions passed vide the interim order against the Company, its directors and promoters and promoter group need not be continued. Further, for such reasons, I do not propose to initiate further action as contemplated in paragraph 18 of the interim order.

9. 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 revoke the directions issued vide the interim order dated June 04, 2013 against the company, Premier Synthetics Limited, its directors, promoters and promoter group, with immediate effect.

10. 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 : February 10th, 2014 Place : Mumbai