Union Bank let off in Vikas WSP IPO case

The Securities and Exchange Board of India Thursday said charges against Union Bank of India with regard to the Vikas WSP Ltd. public issue case had been dropped.

In an order passed on Monday, Sebi said it is disposing of the matter as the facts and circumstances of the case do not merit imposition of any penalty.

Union Bank was the merchant banker to the public issue of Vikas WSP, the world's second largest guar gum producer. Vikas WSP had come out with a public issue of 4,486,500 equity shares at par, which closed for subscription on Dec. 17, 1993.

As per the prospectus, out of the 3,988,200 shares to be allotted to the promoters, 2,492,490 shares, or 25 per cent of the total post issue capital, were to be locked-in for five years and the balance 1,495,710 shares locked in for three years from the date of allotment or commencement of commercial production, whichever was later. Sebi conducted an investigation into the dealing in shares of Vikas WSP and into any possible violation of Sebi provisions.

The investigations prima facie revealed that Dynamic Superways and Exports Ltd., the registrar to the issue, had not inscribed 'not transferable' on the promoters' quota of shares, which were to be under lock-in for a period of 3-5 years, as per the terms of the prospectus.

It was alleged that Union Bank had contravened the provisions of Sebi guidelines for disclosure and investor protection, and Sebi (Merchant Bankers) Regulations, 1992 by not bringing to the notice of the board the said act of omission by the registrar.

The enquiry officer appointed by Sebi, after examining the enquiry report, the show cause notice, the reply of Union Bank and the material available on record, said the facts and circumstances of the case do not merit imposition of any penalty and therefore, disposed off the matter.