2020 (1) TMI 377 - AT - SEBI

Non compliance of various provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Penalty imposed - HELD THAT - The appellant has violated various provisions of the Listing Regulations. The limited prayer made before us was that due to unforeseen events, the stock exchange should have taken the events as a mitigating factor to waive or reduce the quantum of penalty. In this regard, we find that the exceptions carved out in the circular dated May 3, 2018 relates to certain events which in the instant case was not existing. Further, we find that there no justification or any reason has been given as to why a Company Secretary and the two independent directors could not be appointed. In the absence of any cogent reasons, we do not find any justification to reduce the quantum of penalty.

Summary

Issues:
Violation of various provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 leading to imposition of penalties.

Analysis:
The appeal was filed against the order of Bombay Stock Exchange Ltd. imposing a penalty of ?20,40,000 for non-compliance with Listing Regulations. The appellant, a public listed company with over 6800 shareholders, failed to comply with several provisions. SEBI's circular dated May 3, 2018, provided a streamlined process for penalty imposition, allowing stock exchanges flexibility to deviate under exceptional circumstances with written reasons. Exceptional events for penalty waiver included natural calamities, regulatory seizures, non-approved compliances, court/regulator directions, and accidental damage.

The appellant violated various regulations, with penalties ranging from ?1000 to ?460,000. While some violations were rectified, others persisted. The appellant sought penalty waiver citing exceptional circumstances for not appointing a Company Secretary and two independent directors. However, the representation was rejected, and the penalty upheld. The appellant's argument for penalty reduction based on unforeseen events was dismissed as the exceptions in the circular did not apply, and no justification was provided for the non-appointments.

The Tribunal found the appellant in violation of Listing Regulations and rejected the appeal. It concluded that no merit existed in reducing the penalty due to the absence of valid reasons for non-compliance with the regulations. The appeal was dismissed based on the lack of justification for penalty reduction.