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Capital market regulator Sebi today exonerated ERP Soft System Ltd promoter, D Sarojanamma, from charges of violating disclosure norms.
A probe by Securities and Exchange Board of India (Sebi) had found that Sarojanamma had bought ERP Soft System's shares from her husband D S Reddy in off-market transactions that resulted in change in their respective shareholding patterns.
However, the change in their shareholding was not disclosed to the stock exchanges, thereby violating the market regulator's norms.
Replying to the charges, Sarojanamma submitted to Sebi that she had not purchased the shares and that it was only an "internal transfer by way of operation of law", since her husband had expired on November 11, 2011 and as she was the legal nominee, the shares were transferred in her account.
In its order today, Sebi said the shares were transmitted to her "from her late husband by way of operation of law".
"I am inclined to take a lenient view in the matter and thus conclude that transmission of shares, sans any voluntary act on the part of the promoter, is not a fit case for imposition of monetary penalty... And that D Sarojanamma is exonerated from the charges," Sebi Adjudicating Officer Anita Kenkare said.
Sebi has observed that on June 19, 2012, Reddy's 1.50 lakh shares (3.79% stake) of ERP Soft System were transferred to Sarojanamma in an off-market transaction.
As a result of this dealing, Sarojanamma's shareholding in the company increased from 5.05% to 8.84% while Reddy's stake was reduced to nil.
As per the norms, in such cases where there is change in promoter shareholding requisite disclosures have to be made to the concerned stock exchanges but the couple had allegedly failed to comply with the norms.
