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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 ..... rading and Agencies Ltd. (hereinafter referred to as 'the company') by way of inter se transfer between the promoters i.e. from two other promoters, namely, Shree Satyanarayan Properties Pvt. Ltd. and Kramer Pharmaceuticals Pvt. Ltd. He also was a promoter of the company during the relevant period. This acquisition of shares had increased the shareholding of the appellant No. 1 Susheel Somani from 0.35% to 31.68%. Since the shares were acquired without making any public announcement as stipulated under Regulation 3(1) read with Regulation 13(1) of the SAST Regulations, 2011, it was alleged by the respondent SEBI that the Appellant No. 1 has violated the provisions of Regulation 3(1) read with Regulation 13(1) of the SAST Regulations, 2011. 3. It was also alleged that such acquisition of the shares by appellant No. 1 Susheel Somani led to the increase in the collective shareholding of all the appellants - the promoters, from 29.42% to 61.10% which was more than threshold limit of 5%. Therefore, all the appellants were required to make public announcement as stipulated under Regulation 3(2) read with Regulation 13(1) of the SAST Regulations, 2011. However, as no public annou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants and Mr. Kumar Desai, the learned counsel with Mr. Kaushal Parsekar, Ms. Tanvi Rana, the learned counsel for the Respondent. 9. Regulation 3(2) and Regulation 13(1) of the SAST Regulations 2011 are as under :- "3(2). No acquirer, who together with persons acting in concert with him, has acquired and holds in accordance with these regulations shares or voting rights in a target company entitling them to exercise twenty-five per cent or more of the voting rights in the target company but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permissible non-public shareholding. Provided further that, acquisition pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management company; (vii) a collective investment scheme and its collective investment management company, trustees and trustee company; (viii) a venture capital fund and its sponsor, trustees, trustee company and asset management company; [(viiia) an alternative investment fund and its sponsor, trustees, trustee company and manager;] (ix) 5 [***] (x) a merchant banker and its client, who is an acquirer; (xi) a portfolio manager and its client, who is an acquirer; (xii) banks, financial advisors and stock brokers of the acquirer, or of any company which is a holding company or subsidiary of the acquirer, and where the acquirer is an individual, of the immediate relative of such individual: Provided that this sub-clause shall not apply to a bank whose sole role is that of providing normal commercial banking services or activities in relation to an open offer under these regulations; (xiii) an investment company or fund and any person who has an interest in such investment company or fund as a shareholder or unitholder having not less than 10 per cent of the paid-up capital of the investment company or unit capital of the fund, and any other investment company or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to control over such qualifying persons being exclusively held by the same persons; (iv) persons acting in concert for not less than three years prior to the proposed acquisition, and disclosed as such pursuant to filings under the listing agreement; (v) shareholders of a target company who have been persons acting in concert for a period of not less than three years prior to the proposed acquisition and are disclosed as such pursuant to filings under the listing agreement, and any company in which the entire equity share capital is owned by such shareholders in the same proportion as their holdings in the target company without any differential entitlement to exercise voting rights in such company: Provided that for purposes of availing of the exemption under this clause,- (i) If the shares of the target company are frequently traded, the acquisition price per share shall not be higher by more than twenty-five per cent of the volume-weighted average market price for a period of sixty trading days preceding the date of issuance of notice for the proposed inter se transfer under sub-regulation (5), as traded on the stock exchange where the maximum volume of trading in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. It is an admitted fact that the appellants have made 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. 14. While determining the quantum of penalty, the AO has taken into consideration the provisions of Section 15J of the Securities and Exchange Board of India Act, 1992 which reads as under :- "15J. While adjudging quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely :- (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to an investors or group of investors as a result of the default; (c) the repetitive nature of the default." 15. The AO took into consideration the mitigating fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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