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TMI Blog2020 (3) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... es and Exchange Board of India (hereinafter referred to as, 'SEBI') dated February 15, 2018 imposing penalties individually on each of the appellants totaling a sum of Rs. 50 lacs under section 15A(b) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as, 'SEBI Act') for violation of Regulation 29(2), 29(3), 31(1), 31(2) and 31(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as, 'SAST Regulations') and Regulation 13(3), 13(4), 13(4A) and 13(5) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as, 'PIT Regulations'). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and only the pledger and, therefore, no penalty could be imposed under Regulation 29 of the SAST Regulations. Before dealing with the proposition advanced by the appellants, it would be appropriate to refer to the provisions of Regulation 29 of the SAST Regulations which is extracted hereunder :- "29.(1) Any acquirer who acquires shares or voting rights in a target company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such target company, aggregating to five per cent or more of the shares of such target company, shall disclose their aggregate shareholding and voting rights in such target company in such form as may be specified. 29(2) Any person, who together with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge is invoked meaning thereby the shares are sold, the necessary consequence which follows is the reduction in the shareholding of that particular entity. In the instant case, whenever the pledged shares of a particular appellant was invoked, there was a change in the shareholding of that appellants and, consequently, the appellants under Regulation 29(2) read with 29(3) was required to disclose the change in the shareholding within two working days of the revocation of the shares to the stock exchange as well as to the target company. Admittedly, as per the chart indicated after paragraph 21 of the impugned order, no disclosures were made by the appellants when their pledges were invoked. Thus, there was a clear violation of Regulation 29( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) or under this sub-regulation; and such change exceeds 2% of total shareholding or voting rights in the company. 13(4) Any person who is a director or officer of a listed company, shall disclose to the company and the stock exchange where the securities are listed in Form D, the total number of shares or voting rights held and change in shareholding or voting rights, if there has been a change in such holdings of such person and his dependents (as defined by the company) from the last disclosure made under sub-regulation (2) or under this sub regulation, and the change exceeds Rs. 5 lakh in value or 25,000 shares or 1% of total shareholding or voting rights, whichever is lower. 13(4A) Any person who is a promoter or part of promote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it involved a change in the shareholding. Thus, the contention of the appellants cannot be accepted. 11. We also find that the Appellant No. 1 had also indulged in off-market transaction which resulted in the change in the shareholding and such change is required to be disclosed under Regulation 13(4A) and 13(5) of the PIT Regulations. Since, the same was not done, the penalty imposed was justified. We also find that when the pledge was revoked, the said revocation also triggered the requirement to make the disclosures under Regulation 31(2) and 31(3) of the SAST Regulations which again was not made by the Appellant No. 1. 12. In the light of the aforesaid, the order of the AO is affirmed with the modification that the penalty of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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