Order in the matter of KLG Capital Services Ltd in respect of N. Ravichandran
- CitationWTM/GM/EFD/DRA-I/43B/2020–21
Ratio decidendi
The rule this decision rests on
Where a debarred person already holds securities, a corporate benefit attaching to those holdings, such as a rights entitlement, is not a new dealing in the securities market. The restraint on dealing does not bar the person from taking up that entitlement, provided it is limited to the number of shares held on the date of the debarment order and does not extend to shares renounced by others. Conversion of physical share certificates held on the date of the debarment order into demat form does not dilute the restraint on dealing, and may therefore be permitted within a fixed period. Save for the relaxations so expressly granted, the debarment imposed by the earlier order continues in full force for the remainder of its term.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
In the matter of KLG Capital Services Limited in respect of N. Ravichandran (AABPN7069H)
1. Securities and Exchange Board of India (SEBI), in exercise of power under Sections 11, 11B and 11(4) of the SEBI Act, 1992, read with Regulation 11 of the SEBI (Prohibition of Insider Trading) Regulations, 1992, had passed an Order dated November 05, 2019, bearing reference number WTM/GM/EFD/DRA- I/43/2019-20 read with Addendum dated February 14, 2020, bearing reference number WTM/GM/EFD/ DRA-I/43A/2019–20 (hereinafter together referred to as “the Order”) in the matter of KLG Capital Services Limited, whereby Shri N. Ravichandran, along with certain other entities, was inter alia debarred from buying, selling or otherwise dealing in securities market, in any manner whatsoever, or accessing the securities market, directly or indirectly, for a period of five years from the date of the Order, subject to setting off of the period of debarment already undergone by him in the matter.
2. SEBI is in receipt of an email dated May 28, 2020, sent on behalf of Shri N. Ravichandran by his advocates, M/s. Crawford Bayley & Co., whereby Shri N. Ravichandran has submitted inter alia that he currently holds shares of Reliance Industries Limited, which has recently announced its Rights Issue, which is Order in the matter of KLG Capital Services Limited open for subscription from May 20, 2020 and closes on June 03, 2020. Shri N. Ravichandran has requested SEBI for permitting him to apply for shares in the said Rights Issue. He has further requested SEBI for permission to convert certain physical share certificates held by him into demat form.
3. I note that the abovementioned request regarding applying for shares in the Rights Issue of Reliance Industries Limited pertains to availing benefits of corporate action on the shares which Shri N. Ravichandran was already holding as on the date of the Order. I further note that conversion of physical shares certificates into demat form does not dilute the restraint imposed on the Shri N. Ravichandran vide the Order in any manner. Considering the above, I hereby grant the following limited relaxations to Shri N. Ravichandran:
(a) Shri N. Ravichandran is permitted to subscribe to shares in the abovementioned Rights Issue of Reliance Industries Limited up to his entitlement accruing due to his shareholding in Reliance Industries Limited as on the date of the Order (i.e. November 05, 2019). However, Shri N. Ravichandran shall not be permitted to subscribe to shares renounced by any other shareholder of Reliance Industries Limited in the abovementioned Rights Issue. (b) Shri N. Ravichandran is hereby permitted to convert the physical share certificates held by him, as on the date of the Order, into demat form, within 3 months of the date of this order.
(c) Except for subscribing to shares in the abovementioned Rights Issue and converting physical share certificates into demat form as permitted above, Shri N. Ravichandran shall continue to remain debarred from buying, selling or otherwise dealing in securities market, in any manner whatsoever, or accessing the securities market, directly or indirectly, till the debarment period as directed in the Order is over.
4. This order shall come into force with immediate effect.
5. The depositories, the exchanges and the RTAs are directed to take note of the limited relaxations granted above and take necessary action for giving effect to the same.
6. A copy of this order shall be served upon the depositories, the exchanges and the RTAs.
Place: Mumbai G. MAHALINGAM Date: June 02, 2020 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
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