Valiant Organics settles case with market regulator Sebi, pays Rs 10 lakh

Valiant Organics Ltd settled with capital markets regulator Sebi a case concerning flouting of alleged disclosure rules by paying Rs 10 lakh as the settlement amount.

This came after the company filed a settlement application with Sebi proposing to settle the enforcement proceedings that may be initiated against it for the alleged lapse of non-compliance of Listing Obligations and Disclosure Requirements (LODR) Regulations by "neither admitting nor denying" any finding.

"It is hereby ordered that the proceedings that may be initiated for the violations... are settled qua the applicant (Valiant Organics)," Sebi said in a settlement order passed on Monday.

In its order, Sebi noted that Amarjyot Chemical Ltd (ACL) merged with Valiant Organics by absorption, which was sanctioned by the Mumbai Bench of the National Company Law Tribunal in March 2019.

Following this, Valiant Organics allotted 72 fully paid equity shares of Rs 10 each and 21 Optionally Convertible Preference Shares (OCPS) of Rs 10 each held in ACL, for every 100 equity shares of Rs 10 each held in ACL.

One OCPS was to be converted into 1 equity share of the applicant at the option of the holder within 18 months from the date of trading approval by the BSE.

Valiant Organics had allotted 62,84,868 equity shares and 18,33,087 OCPS to the shareholders of Amarjyot Chemical in May 2019.

At the time of filing the application with the BSE for prior approval on the scheme, Valiant Organics as well as the the stock exchange failed to note that the applicant was non-compliant with Sebi's rule, the order said.

As per rules, the percentage of shareholding of pre-scheme public shareholders of a listed entity and the Qualified Institutional Buyers (QIBs) of an unlisted entity, in the post scheme pattern of the "merged" company should not be less than 25 per cent, it noted.

This was pointed out by the BSE only at the time of filing the listing application of OCPS in October 2019.