Order in the matter of Kovalam Investment and Trading Company Limited

WTM/PS/CFD/02/APRIL/2014

SECURITIES AND EXCHANGE BOARD OF INDIA 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 Kovalam Investment and Trading Company 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. Kovalam Investment and Trading Company 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. Pursuant to the passing of the interim order, the Company vide letter dated June 22, 2013 submitted that in order to comply with the requirement of minimum public shareholding, it is proposing to issue bonus shares to the public shareholders with the promoters/promoter group forging their bonus entitlement. The Company further submitted that the process for the issuance of bonus shares had been initiated and was approved by the Board of Directors of the Company in their meeting held on June 20, 2013. 4. Thereafter, vide letters dated August 27, 2013 and February 13, 2014, and e-mail dated March 04, 2014, the Company has inter alia submitted that the proposal for issue of bonus shares in the ratio of 132:10 (i.e., 132 bonus equity shares of 10/- each for every 10 shares held) to non-promoters was approved by the shareholders of the Company in the Extra-Ordinary General Meeting held on July 15, 2013. The record date for determining the members eligible for the entitlement was fixed as August 07, 2013. Further, in terms of the approved ratio, 5,17,704 shares were allotted on August 08, 2013 to public shareholders only.

Consequent thereto, the promoters' shareholding has reduced to 74.96% and that the public shareholding increased to the level of 25.04%. The Company submitted that it has complied with the MPS requirements and therefore requested SEBI to revoke the directions issued vide the interim order in respect of the Company, its directors, promoters and promoter group. 5. As the Company, vide its e-mail dated April 01, 2014, requested SEBI to decide the matter on merits without affording any opportunity of personal hearing to it, this case is disposed off accordingly on the basis of the submissions made by the Company and the material available on record. The Company has informed that it has allotted shares only to public shareholders in order to achieve compliance with the minimum public shareholding requirement. I note from the records that 5,17,704 bonus shares were allotted on August 08, 2014 and these shares have been listed and permitted to be traded by the BSE with effect from August 19, 2013. I have also perused the shareholding pattern of the Company for the quarter ended September 2013 (uploaded in the website of the BSE), which confirms the submission of the Company that the public shareholding is above the minimum level of 25%, as required under rule 19A of the SCRR read with Clause 40A of the Listing Agreement.

6. Considering the fact that the Company has complied with the MPS norms, though belatedly on August 08, 2013, I, while warning the Company for such delayed compliance, do not propose to initiate further action against the Company as contemplated in paragraph 18 of the interim order. The Company is advised to ensure compliance with all the applicable laws and regulations administered by SEBI, in letter and spirit, within the time lines prescribed by SEBI under such statutes. 7. With the above observations, 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, Kovalam Investment and Trading Company Limited, its directors, promoters and promoter group, with immediate effect. 8. 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 : April 16th, 2014 Place : Mumbai