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TMI Blog2010 (9) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... moters of and manage and control M/s. Ushdev International Ltd. which is the target company whose shares are listed on the Bombay Stock Exchange Ltd., Mumbai (BSE). M/s. Ushdev Commercial Services Pvt. Ltd. (for short Ushdev Commercial) is another group company managed and controlled by the promoters of the target company. It is not in dispute that the appellant and Ushdev Commercial are group companies and promoters of the target company and form part of the Ushdev group of companies. They have also been shown as associates of the target company in its annual report for the year 2004-05. As on June 30, 2005, Ushdev Commercial held 7,55,300 equity shares of the target company which represented 18.74 per cent of its entire share capital. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e out with a public offer, the Board found that the former had violated the provisions of the takeover code. The Board also found from the annual report of the target company for the year 2004-05 that Ushdev Commercial and the appellant were shown as entities related to the target company whereas in the shareholding pattern submitted by the target company to BSE for the quarters ending June and September 2005, they had been shown under the non promoter category. The Board initiated adjudication proceedings against the appellant and the target company under Chapter VI A of the Securities and Exchange Board of India Act, 1992 (for short the Act) for the imposition of monetary penalty for the aforesaid irregularities. The target company was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l hearing on March 18, 2010 and submitted that the purchase of shares was an inter se transfer of shares within the promoter group and the appellant was under a bonafide belief that the open offer would not get triggered. It was also submitted that the appellant was not aware that exemption from the provisions of the takeover code had to be obtained for this transfer. The appellant also furnished the details of its acquisition of shares of the target company. After considering the show cause notice and the submissions made by the appellant, the adjudicating officer by his order of April 29, 2010 levied a monetary penalty of ₹ 72,14,000 on the appellant under Section 15H (ii) of the Act for the violation of Regulation 10 read with Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx (c) xxx (d) xxx (e) inter se transfer of shares amongst (i) xxx (ii) xxx (iii) (a) xxx (b) promoters: Provided that the transferor(s) as well as the transferee(s) have been holding shares in the target company for a period of at least three years prior to the proposed acquisition. Since the acquisition by the appellant was by way of transfer of shares from one promoter to another, it would have been exempt from the provisions of Regulation 10 provided that the transferor and the transferee fulfilled the requirements of the proviso to Regulation 3(1)(e)(iii) reproduced above. The proviso requires that the transferor and the transferee should have held the shares for a period of three years wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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