Shankar Sharma Cleared in Brightcom Case, Allowed to Sell Shares

26 Mar 2024 , 03:18 PM

The directives issued to 20 out of the 25 noticees in the Brightcom Group (BGL) case have been verified by the market regulator.

After looking into a preferential issue of shares and warrants for which some allottees had only made partial payments, the Securities and Exchange Board of India (Sebi) issued an interim decision on August 22, 2023. Sebi released a confirming order on February 28.

Ashwani Bhatia, a Whole-time Member of Sebi, has also recommended in a confirmatory decision that the order be forwarded to the Enforcement Directorate (ED) for the agency's review, given that some of the transactions included foreign exchange and could have entailed breaking laws related to dealing in foreign currencies.

Directions issued to five of the 25 noticees in the interim order remain unchanged in the confirmatory order.

Orders against the late Shivkrishna Harakchand Damani and seasoned investor Shankar Sharma are withdrawn. Sharma and the majority of noticees were instructed in the interim order not to sell their BGL shares in any way, directly or indirectly, until further orders were issued. This restriction has been lifted with the issuance of this confirmation order.

Noticees had provided Sebi with a similar reply dated February 16, 2024. Regarding Sharma's transactions, the response read as follows: 'SEBI has claimed that, despite Shankar Sharma owing BGL a total consideration of ₹56.66 Crore, he only paid ₹39.98 Crore, leaving a ₹16.67 Crore gap.

Nevertheless, BGL has received the whole consideration of ₹56.66 Crore, as shown by the ledger statement it has kept for Shankar Sharma's account, which is backed up by statements from its bank accounts. The bank account statements and the ledger entries match. 

'SEBI has not taken into account all of Shankar Sharma's transactions,' it continued. Only the bank account entries from 11.07.2022 to 28.11.2022 have been taken into consideration by SEBI. It did not take into account the five entries made before July 11, 2022. The entries are reflected in BGL's HDFC Bank Account No. 50200058179886, which SEBI has neglected to take into account.

Only BGL and its subsidiaries are subject to the prohibition on Narayan Raju, the former chief financial officer (CFO) of the business, from holding a directorship or a Key Management Position (KMP) in any listed company or its subsidiaries. 

The orders that were given against Ishan Prakash and Kishan Prakash are no longer valid. Nonetheless, it has been requested that the shares of BGL that Kishan and Ishan Prakash currently own in their demat accounts be moved to their father Varadarajan Prakash's demat account. Following this, the shares will be marked as frozen until further order.

The regulator's ruling prohibiting the business's promoter and CMD, Suresh Kumar Reddy, from holding a key management position (KMP) in any listed company or its subsidiaries or from dealing in the securities market until further instructions is one of the verified directives.

The WTM has recommended that ED be tasked with investigating the order further. The order said as follows: 'Payments in foreign exchange were made through a complex web of transactions for the settlement of loans provided to Mr. Reddy and his enterprises abroad, which may have entailed breaking regulations related to trading in foreign exchanges. Therefore, it would be prudent to send a copy of this order to the Enforcement Directorate so that they can review it and, if necessary, take appropriate action.'

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