Taking action against promoter of Swaraj Automotives for non-compliance of minimum public shareholding norms, Sebi on Wednesday ordered freezing of voting rights and all corporate benefits arising out of its excess stake in the company.
Sebi has also prohibited the promoter and director of the company from dealing in the shares of Swaraj Automotives except for meeting the minimum 25 per cent public shareholding limit till the time of their compliance to this requirement.
Till September 2015, promoter entities -- Mahindra and Mahindra Ltd and Punjab State Industrial Development Corporation-- held 74.18 per cent stake in Swaraj Automotives, while that of public holding was at 25.82 per cent in compliance with Sebi's minimum public shareholding norms.
Later, b4S Solutions acquired the entire equity stake held by the promoters of Swaraj Automotives. In addition, it acquired additional stake in the firm under the open offer and resultantly, it became the new promoter from February 2016.
Following the transaction, the public shareholding in Swaraj Automotives fell below the minimum permissible level of 25 per cent on February 2, 2016.
In order to achieve minimum public shareholding, the company had opted for the process of sale of shares held by promoter through offer for sale in secondary market.
"However, as on March 31, 2017, the public shareholding in Swaraj Automotives was at 18.33 per cent, which continues to remain at that level as on date, clearly indicating non- compliance by the said company with the minimum public shareholding requirement," Sebi said in an order.
Accordingly, Sebi has directed "freezing of voting rights and corporate benefits like dividend, rights, bonus shares, split, etc with respect to the excess of proportionate promoter group shareholding in the company, till such time the company complies with the minimum public shareholding requirement."
The regulator has also restrained the company's directors from holding any new position as a director in any listed company, till the time the firm complies with the norms.
Sebi also warned the company, its promoter and directors, of further penal actions including monetary penalties, prosecution proceedings and restriction in its trading, in the event of continued non-compliance.
"The public shareholding as on March 31, 2017, is 18.32 per cent. Accordingly, the proportionate promoter shareholding would be three times the existing public shareholding -- 54.96 per cent. Thus, the voting rights and corporate benefits with respect to the excess promoter shareholding -- 26.72 per cent, shall be frozen till the minimum public shareholding requirement is complied with," Sebi said.
This order would come into force with immediate effect, Sebi noted.
As per minimum public holding norms, all private sector listed companies were required to achieve at least 25 per cent public shareholding by June 3, 2013.
