Order with respect to Vivek Sharma in the matter of Brooks Laboratories Ltd

ORDER UNDER SECTIONS 11, 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 1. Brooks Laboratories Limited (hereinafter referred to as ‘Brooks’), came out with an Initial Public Offering (hereinafter referred to as 'IPO') of shares during the period of August 16, 2011 to August 18, 2011. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), initiated a preliminary investigation in the scrip of Brooks and found that the company had raised funds from Inter Corporate Deposits (hereinafter referred to as 'ICD') and paid the same to the related entities from whom the ICDs were originally received in the form of advances for equipment, project management fees, etc. It was also revealed that the offer document did not contain the material information. Further, it was prima facie found that Brooks had siphoned off the IPO proceeds for ulterior motives and transferred through layers to entities who had traded in its shares.

2. In view of the same, SEBI vide an ad interim ex-parte order dated December 28, 2011 (hereinafter referred to as ‘interim order’) inter-alia prohibited Mr. Vivek Sharma, an Independent Director of Brooks from accessing the securities market and also from buying, selling or dealing in securities market, directly or indirectly, till further orders. The persons/ entities against whom the interim order was passed, were advised to file their objections, if any, within twenty one (21) days from the date of the said order and also avail opportunity of personal hearing, if they so desire. Pursuant to the same, Vivek Sharma made submissions/ objections vide his letter dated February 02, 2012. Thereafter, an opportunity of personal hearing was afforded to him on March 09, 2012 before me, when he appeared and made submissions. Vivek Sharma also filed written submissions on the date of hearing which were taken on record. The submissions of Vivek Sharma in brief are as under: a. No specific allegation have been made against him in the interim order. b. He became independent director on the board of Brooks on October 01, 2010 and do not hold shares in the company. Further, he was not involved in the day to day management and affairs of the company. He was not been paid any sitting fee/ remuneration as an independent director. c. He had not attended the board meeting held on May 25, 2011, July 02, 2011 and July 21, 2011 where Brooks had decided to raise funds by way of ICDs. He was not the part of any decision taken in regard to ICDs and was not aware about these. d. On becoming aware about the alleged non-disclosure, he resigned from the board of the company as an independent director w.e.f. January 06, 2012. e. As a member of Audit committee, he attended meetings of audit committee held on March 31, 2011 and May 26, 2011 and in all these audit committee meetings the discussion or decisions taken were with regard to financial accounts for the year ended on March 31, 2011 and the appointment of cost auditor for financial year ending March 31, 2012.

3. I have considered the replies/ objections filed by Vivek Sharma, the submissions made during the personal hearing and the relevant material available on record. The limited issue to be considered in this Order is to decide whether, based on the available material on record and after considering the submissions made by Vivek Sharma, the directions issued by SEBI vide interim order need to be continued, revoked or modified in any manner, in so far as it relates to Vivek Sharma.

4. I note that Vivek Sharma was a signatory to the prospectus. However, it is seen that he had not attended the board meetings held on May 25, 2011, July 02, 2011 and July 21,

2011 when Brooks had decided to raise funds by way of ICDs to fund its capital expenditure. I note the submission of Vivek Sharma that he was not involved in the day-to-day management/ affairs of the company and was not aware of the decisions taken regarding the ICDs. It is observed that the directions issued vide the interim order against the independent directors are interim in nature and were issued on the basis of prima facie findings. I note that the investigation in the matter is still in progress. It is seen that Vivek Sharma has already undergone restraint for more than nine months pursuant to the interim order. Further, he has resigned from the post of Independent Director of Brooks on January 06, 2012. A final view with regard to the role of the independent director, if any, in the matter can be taken on the completion of the investigation. I am therefore, of the considered view that the directions issued against him vide the interim order need not continue during the investigation in the matter.

5. 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(4) and 11B thereof, hereby revoke the directions issued against Mr. Vivek Sharma [PAN: ABFPS 9096N] vide the ad-interim ex-parte Order dated December 28, 2011. This order is without prejudice to any enforcement action that SEBI may deem necessary against the aforesaid person in the matter, on completion of the investigation.

PLACE: Mumbai PRASHANT SARAN DATE: October 16, 2012 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA