Sebi imposes Rs90 lakh fine on entities in Kwality Credit case

Capital market watchdog Sebi has slapped a total penalty of Rs 90 lakh on 15 entities for failure to make a public announcement regarding acquisition of Kwality Credit & Leasing Ltd (KCLL) shares.
Sebi has levied a joint penalty of Rs 50 lakh on 10 firms -- Shri Vishnu Krupa Commodities, Sangam Agro Agencies, Param Commodities, Kalpa Mercantile, Utkarsh Agro Agencies, Paramarth Agro Marketing, Apurva Commodities, Pawantar Agro Agencies, Chirayush Agro Marketing and Miatru Agro Marketing.
Besides, the market regulator has imposed a penalty of Rs 40 lakh on five persons -- Dharmendra Kothari, Rajesh Kothari, Hemant Kothari, Ichraj Devi Kothari and Sunita Kothari.

However, the market regulator said that the proceedings against a sixth individual, Pradeep Kumar Kothari, stood abated on account of his death.
Sebi in its show cause notices had alleged that the 15 entities as persons acting in concert (PAC) had acquired more than 15 per cent of KCLL shares which obligated them to make a public announcement to the company shareholders.
In orders dated March 25, the market regulator noted that it had been "established" that the entities had "failed to make necessary public announcement to acquire the shares of the company in accordance with SAST (Substantial Acquisition of Shares and Takeovers) Regulations".

Sebi had initiated a probe after it received a various alerts in 2010 on high off-market transfers in KCLL shares.

The market regulator had observed that a total of 23.25 lakh shares were transferred through off-market deals in September 2010 to a group of entities who had demat accounts with depository participant, Guiness Securities Ltd.
Sebi had found that the 10 firms had together acquired 14.47 lakh shares constituting 41.35 per cent stake of KCLL, while the six individuals had acquired a total of 6.83 lakh shares representing about 19.53 per cent holding in the firm.
It was noted that the 10 firms had common addresses and that all of them were under the same management and control.

Moreover, Dharmendra Kothari and Sunita Kothari were the directors of Guiness Securities during the year 2010-11.
According to the norms, an entity acquiring shares which would entitle it to exercise fifteen per cent or more of the voting rights in a company, has to make a public announcement.
In a separate order today, Sebi has slapped a penalty of Rs 4 lakh on White Diamonds Industries promoter Ajay K Kakkad for delay in making annual disclosures of his shareholding to the company within the stipulated time frame.
"...A penalty of Rs 4 lakh on the noticee would commensurate with the delay on the part of the noticee in making the yearly disclosures in this case," Sebi said.

As per norms, Kakkad was required to make the yearly disclosure to the company within 21 days from the financial year ending March 31 in respect of his holdings.
Kakkad had not made timely disclosures on various occasions between 1998-2010.