Market regulator Sebi has disposed of the case against Kwality Dairy (India) Ltd after the company made a payment of Rs 3 crore to settle alleged violation of disclosure norms related to preferential allotment of shares.
The case related to non-compliance with certain norms in connection with Kwality Dairy's preferential allotment of five lakh shares to its promoters during 1999-2000 period.
In an order dated October 30, Sebi said the proceedings against Kwality Dairy for non-compliance with the guidelines, "stand settled and Sebi shall not initiate any enforcement action against the applicant for the same".
Post the preferential allotment of shares, stock exchange BSE noticed that Kwality Dairy did not comply with certain disclosure norms. Subsequently, the bourse directed the company to obtain a no-objection certificate from Sebi.
Among others, Sebi rules require a company to furnish various details of proposed shares issue in the notice for general meeting that is sent to shareholders.
Pursuant to the preferential allotment, the shares were converted into equity shares on June 14, 2002.
"Subsequently, when these equity shares were proposed to be listed on the BSE, it was then advised by the BSE that that above-mentioned clauses of the DIP Guidelines had not been complied with by the applicant and that the applicant should obtain a no-objection letter from Sebi," the order said.
In view of the aforesaid non-compliances, the applicant filed the consent application, it added.
Sebi said its High Powered Advisory Committee (HPAC) considered the consent terms and recommended the case for settlement on payment of Rs 3 crore. The same was approved by the panel of whole time members of Sebi, it added.
The market regulator said that enforcement actions, including commencing or reopening of the proceedings, could be initiated if any representation made by Kwality Dairy is found to be untrue.
