Sebi penalises Rs14 lakh fine on three erstwhile promoters of Genus Prime Infra on violating takeover norms

The penalty was imposed on Vivekshil Dealers now known as Hi Print Electromack Private Limited, Kailash Industries and Genus Paper & Boards.

Sep 17, 2020 05:09 IST India Infoline News Service

Genus Paper & Boards has informed about a penalty of Rs14 lakh imposed by the market regulator SEBI on three erstwhile promoters of Genus Prime Infra for violating takeover norms.

The penalty was imposed on Vivekshil  Dealers now known as Hi  Print  Electromack  Private Limited, Kailash Industries and Genus Paper & Boards.

These three became the promoter of Genus Prime in October 2010, by acquiring a controlling stake in the latter through a share purchase agreement and open offer.

According to Sebi, an open offer was made by Rajendra Kumar Agarwal, Jitendra Kumar Agarwal and  Amit  Agarwal to shareholders of Genus Prime through a public announcement dated July 01, 2014, for acquiring 36,59,110 shares of the company representing 26% of the paid-up capital of the company.

While examing the acquisition offer of July 2014, the market regulator came across that Vivekshil Dealers and Kailash Industries have failed to comply with the provisions of Regulation 8(2)of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (hereinafter referred to as "SASTRegulations,  1997")  and  Regulations  30(1)  and  30(2) SAST  Regulations, 2011.

Similarly, Genus Paper and Dr Chandra Kumar Jain, being Promoters of GPIL had failed to comply with the provisions of Regulation  3(2) of the SAST Regulations, 2011.

Sebi noticed that or quarters ending December 2010 to December 2012, the shareholding of two promoter entities namely Vivekshil and Kailash which was equivalent to  0.99%  was included in the public category and not in the promoter category.

As per the requirements of Regulation 8(2) of the SAST, 1997, the Vivekshil and Kailash being promoters of the company were required to make the disclosures regarding the number and percentage of shares or voting rights held by them or with persons acting in concert, in that company within 21 days from the financial year ending March 31 as well as the record date of the company for declaration of dividend.

However, the duo delayed in the requisite disclosures for more than six years. The disclosure was made on July 04, 2017.

Sebi points out that, under Regulation 3(2) of the SAST, 2011, no acquirer, together with persons acting in concert with him who holds  25% or more of the shares or voting rights in a target company can acquire more than 5% of the shareholding of the company within any financial year unless the acquirer makes a  public announcement of an open offer for acquiring shares.

That said, Sebi observed that Regulation 3(2) was triggered during the aforesaid period of August 22, 2013, to September 23, 2013, as the acquisition of the Noticees was 5% during the same financial year of 2013-2014. However, Noticees have failed to make the public announcement for the same.

Further, Sebi said, "It is evident from the above that the Noticees being PACs held more than 25% of the shareholding in  GPIL  during the period relevant to the instant allegation against them.  Further,  on perusal of  the letter dated  September  30,  2014, by MEFCOM, I note that Noticee-1 purchased 7,05,800 shares constituting 5.01% of GPIL during the period August 22, 2013, to September 23, 2013, the act which again is not disputed by the  Noticees. However,  it  is  the  contention  of  the Noticees before me that they intended to acquire the shares below 5% to avoid  triggering  open  offer  requirement  and  an  inadvertent  mistake  of calculations on their part while placing the orders led to the acquisition of shares in excess of 5%."

On Sensex, Genus Paper stock ended at Rs4.96 per piece down 0.20%. Meanwhile, Genus Prime stock ended at Rs1.23 per piece up 4.24%. 

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