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TMI Blog2020 (7) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite disclosures on 7th day as against the provisions of Regulation 29(3) that the disclosures are required to be made within two working days. Thus, technically the appellants were not exempted from making public announcement and, thus, are in violation of the relevant regulations. The AO has observed that as the condition of making disclosures within two working days is not fulfilled, the act was not fit for grant of exemption. In the circumstances, the penalty was imposed. Quantum of penalty - AO took into consideration the mitigating factors that the interest of the shareholders of the target company is not jeopardized and the penalty of ₹ 15 lacs was imposed. AO has not considered the fact that the appellants made the disclosures though belatedly after five days as required by Regulation 29 of the SAST Regulations. Thus, it was a technical breach and, therefore, in our view instead of imposing a penalty of ₹ 15 lacs, a penalty of ₹ 5 lacs would have been just and sufficient. - Appeal No. 184 of 2018 - - - Dated:- 17-3-2020 - Dr. C.K.G. Nair, Member And M.T. Joshi, Judicial Member For the Appellant : Ms. Rishika Harish, Ms. Rakshita Podd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He challenged the said order before this Tribunal vide Appeal No 273 of 2014. However, subsequently he withdrew the appeal with permission to pay the penalty. The same was granted. 5. So far as the second violation as detailed in paragraph No. 3 above is concerned, it is now the bone of the contention between the parties. By the very common order the then AO of the respondent SEBI also imposed a penalty of ₹ 15 lacs for violation of Regulation 3(2) read with Regulation 13(1) of the SAST Regulations, 2011. The appellants had filed Appeal No. 274 of 2014 challenging the said order. Vide order dated March 1, 2016, this Tribunal remanded the matter back to the AO for passing fresh order on merit. 6. After remand, the appellants contended before the AO that there was no violation of Regulation 3(2) read with Regulation 13(1) of the SAST Regulations, 2011. They also pleaded that since the transfer was inter se between the promoters, the same was exempted from making a public announcement as provided by Regulation 10 of the SAST Regulations. They contended that two of the entities who had transferred the shares to the appellant No. 1 Susheel Somani continued to be promoter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation,- (i) gross acquisitions alone shall be taken into account regardless of any intermittent fall in shareholding or voting rights whether owing to disposal of shares held or dilution of voting rights owing to fresh issue of shares by the target company. (ii) in the case of acquisition of shares by way of issue of new shares by the target company or where the target company has made an issue of new shares in any given financial year, the difference between the pre-allotment and the post-allotment percentage voting rights shall be regarded as the quantum of additional acquisition. 13. (1) The public announcement referred to in regulation 3 and regulation 4 shall be made in accordance with regulation 14 and regulation 15, on the date of agreeing to acquire shares or voting rights in, or control over the target company. 10. We find the definition of the term 'person acting in concert' in SAST Regulations, 2011, which reads as under :- 2(q). ― persons acting in concert means,- (1) persons who, with a common objective or purpose of acquisition of shares or voting rights in, or exercising control over a target company, pursuant to an agreement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of this clause - associate of a person means,- (a) any immediate relative of such person; (b) trusts of which such person or his immediate relative is a trustee; (c) partnership firm in which such person or his immediate relative is a partner; and (d) members of Hindu undivided families of which such person is a coparcener; 11. A reading of the definition itself would show that there should be common objective of purchase of shares or voting rights amongst the members to make them persons acting in concert. In the present case, while two promoters had an objective to dispose of their shares, the appellant No. 1 Susheel Somani had an objective to acquire the shares. This itself would show that there was no common cause between the appellant No. 1 Susheel Somani and the two transferors. Therefore, though the promoter group holdings in the company remained constant, the same would be irrelevant as observed by the AO. The order to that extent cannot be faulted with. 12. The question however remains as to whether the appellants were exempted from making a public announcement. In this regard, it would be relevant to advert to the provisions of Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 8; and (ii) the transferor and the transferee shall have complied with applicable disclosure requirements set out in Chapter V. The provisions of Regulation 29 in Chapter V are as under :- 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. (2) Any person, who together with persons acting in concert with him, holds shares or voting rights entitling them to five per cent or more of the shares or voting rights in a target company, shall disclose the number of shares or voting rights held and change in shareholding or voting rights, even if such change results in shareholding falling below five per cent, if there has been change in such holdings from the last disclosure made under sub-regulation (1) or under this sub-regulation; and such change exceeds two per cent of total shareholding or voting rights in the target c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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