Order in the matter of Integrated Technologies Limited- minimum public shareholding requirement

WTM/PS/15/CFD/JUNE/2014 SECURITIES AND EXCHANGE BOARD OF INDIA 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 Integrated Technologies 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. Integrated Technologies 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"), the Delhi Stock Exchange Limited and the Jaipur Stock Exchange Limited.

3. The Company, vide its letter dated November 06, 2013, submitted that its promoter had diluted its shareholding to 75% through an Offer for Sale ("OFS") through the stock exchange. The same was done to align with the requirements of clause 40A of the Listing Agreement and those specified under rules 19(2)(b) and 19A of the SCRR and be compliant with the MPS requirement of 25%. The process of OFS was completed on June 28, 2013. The Company had enclosed copies of its shareholding pattern for the quarter ended June 30, 2013, documents tendered to BSE with respect to the OFS and the certificate of shareholding issued by a practising company secretary.

4. SEBI had perused such documents and also the disclosures made in the website of BSE. During examination, BSE had informed SEBI that - (a) The promoter, Mr. Rajeev Bali had sold 5,15,700 shares through OFS; and (b) There were errors in the disclosures under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ("the Takeover Regulations") and the SEBI (Prohibition of Insider Trading) Regulations, 1992 ("the PIT Regulations") submitted by the Company. Upon BSE bringing the same to the notice of the Company, the same were rectified and the rectified disclosures were submitted;

5. BSE had also forwarded the Announcement made by the promoter regarding the OFS, Request for using the BSE platform for undertaking OFS, Information regarding floor price ( 3.25/-), Undertaking given to BSE by the promoter and the list of allottees. BSE also informed SEBI vide e-mail dated May 15, 2014 that it has perused the shareholding patterns submitted by the Company immediately post OFS and also for subsequent quarters and that there was no addition to the list of promoter group/entities or any addition in the shareholding of each of the promoter/promoter group entities. The same indicated that promoters did not participate in the bids in OFS. BSE also advised the Company to provide an undertaking, which was also submitted. In terms of such undertaking, Company/promoter confirmed that the acquirers of shares (from the promoter) in the OFS are not related with the promoters/promoter group.

6. An opportunity of personal hearing was afforded to the Company on June 18, 2014 and the schedule of the same was intimated to the Company vide e-mail dated May 28, 2014. In response, the Company reiterated that it has complied with MPS requirement. The Company also informed that it does not require any personal hearing and requested that a final order be passed.

7. I have considered the reply of the Company, the documents enclosed therewith and other material available on record. According to the Company, its promoter had diluted his shareholding by undertaking an OFS on June 28, 2014. The same had resulted in the increase of public shareholding in the Company from 14.22% to 25.01%, thus complying with the MPS requirements stipulated under rule 19A of the SCRR read with Clause 40A of the Listing Agreement.

8. As informed by BSE, I note that the Company has rectified its disclosures made under the Takeover Regulations and the PIT Regulations. The Company/promoter has undertaken that there is no relation between the promoter and the purchasers of shares in the OFS. Further, BSE has also stated that there is no change in the list of promoters/promoter group or any increase in their shareholding pre or post OFS. In view of the above, it could be accepted that the Company complied with the MPS norms on June 28, 2013, when the OFS had concluded. In terms of rule 19A, a listed company was statutorily obligated to comply with continuous listing norms (i.e., of maintaining public shareholding of at least 25%) on or before June 03, 2013. However, as mentioned above, the Company had belatedly achieved compliance.

9. In view of the foregoing, I find that the Company has delayed in complying with the MPS requirements stipulated under the SCRR and the Listing Agreement, even when it was under notice for three years for achieving such compliance. 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. The Company is also advised to file correct disclosures to the stock exchange in future. 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.

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

11. 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 : June 25th, 2014 Place : Mumbai