Order in the matter of Dr. Agarwal's Eye Hospital Limited in relation to minimum public shareholding requirememt

WTM/PS/66/CFD/DEC/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 Dr. Agarwal's Eye Hospital 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. Dr. Agarwal's Eye Hospital Limited (hereinafter referred to as 'the Company') is one such company against whom the interim order was passed. The public shareholding in the Company on the date of the interim order was 21.77%. The shares of the Company are listed on the Bombay Stock Exchange Limited ('BSE') and Madras Stock Exchange ('MSE').

3. The Company vide its letters dated June 06, 2013, September 27, 2013 and October 24, 2013 replied to the interim order. Thereafter, an opportunity of personal hearing was afforded to the Company on November 22, 2013, when its Chief Financial Officer, Mr. S. Ramanujam appeared and made submissions. The Company has submitted that it has completed the Employees Stock Purchase Scheme ('ESPS') by issuing 2,00,000 equity shares of ₹10 each to the employees. Consequently, the promoter holding in the Company has reduced from 78.23% to 74.90%. During the personal hearing, while reiterating such submissions, the representative submitted that the Company is now compliant with the MPS norms and requested SEBI to withdraw the directions issued in paragraph 17 of the interim order.

4. I have considered the reply of the Company, the letters submitted and the submissions made during the personal hearing. I note that ESPS is a scheme under which the company offers shares to its employees as part of a public issue or otherwise.

5. The Company has submitted that it had examined various methods to comply with the MPS norms and submitted the proposal of ESPS to SEBI vide its letter dated April 05, 2013 for approval. It received the approval from SEBI on May 14, 2013. On receipt of approval, the Board of Directors of the Company had approved the proposed ESPS and convened an Extra Ordinary General Meeting on June 25, 2013 for shareholders' approval. Pursuant to the same, as per the Company the allotment of 2,00,000 equity shares was approved by its Board of Directors on August 05, 2013 and after completing other formalities, it forwarded the listing application of such equity shares to BSE on September 27, 2013.

6. I have perused the notice dated October 22, 2013 of BSE and the letter dated October 23, 2013 of MSE, confirming listing and trading permissions with respect to the shares allotted in ESPS. Pursuant to the aforesaid, the shareholding of the promoter and promoter group in the Company has reduced to 74.90%. The public shareholders presently hold 25.10%, which is above the minimum shareholding required to be held by public shareholders in a listed company, under the MPS norms.

7. The Company has definitely delayed in complying with the MPS requirements under the SCRR, even when it was under notice for three years for achieving compliance. I note that if the Company had decided much earlier, for complying with the MPS requirement, it could have complied with the MPS norms within the due date. I note that it was primarily the responsibility of the Company to comply with the MPS requirement. The Company is, therefore, warned for the same 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 do not propose to initiate further action against the Company, its directors, promoters and promoter group, as contemplated in paragraph 18 of the interim order.

8. 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, Dr. Agarwal's Eye Hospital Limited, its directors, promoters and promoter group, with immediate effect.

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: December 17th, 2013 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA