The SEBI passed an order on Thursday wherein the Board ordered Global Securities, a limited company dealing in financial services to pay a fine of Rs. 3 lakhs for violation of Section 21 of SCRA, 1956 r/w clause 35 of Listing Agreement r/w Regulation 103 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The procedures prescribed by the statute was duly followed by the court, i.e., the adjudicating officer was duly appointed by the Board and the show cause notice was issued to the respondent in accordance with the law, but the respondent didn’t show up so this current matter had to be decided by this court ex-parte.
The issues that arose before the court for consideration were as follows :
- Whether the Noticee has violated Clause 35 of the Listing Agreement r/w Regulation 103 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and section 21 of the SCRA, 1956?
- Does the violation, if any, on the part of the Noticee attract monetary penalty under Section 23E of SCRA, 1956?
- If so, what would be the quantum of monetary penalty which would be imposed on the alleged violator?
The issues were decided by the Tribunal as follows :
- In deciding the issue of whether the Noticee has violated Clause 35 of the Listing Agreement r/w Regulation 103 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and section 21 of the SCRA, 1956, it was observed that the company failed to file its annual shareholding pattern for 2 consecutive periods and such act was in violation of the listing agreement as such filing is mandatory to be disclosed to the public so that the investors can take their decision whether they will invest in a particular company or not and so the company was under an obligation to file shareholding pattern on a quarterly basis in accordance with listing agreement and so it has committed a violation of section 21 of SCRA r/w Clause 35 of listing agreement.
- The court referred to the judgement in SEBI vs. Shriram Mutual Fund and held that mens rea isn’t essential in these kinds of cases and so the present act on part of noticee attracted monetary penalty under Section 23E of SCRA,1956.
- The court considered the factors which are to be considered while imposing a penalty for violation of compliance with listing agreement and held that in the present case, it was difficult to ascertain monetary gain or loss to investor due to act of the respondent and also the act of respondent was repetitive in nature.
Deciding the case, the court, under the powers conferred on it by section 15I of the SEBI Act, imposed a penalty of Rs. 3 lakhs on the company and ordered it to pay the amount within 45 days from receipt of the order.