Capital market regulator Sebi today disposed of the charges against against Monnet Ispat & Energy Ltd in a case related to the company's issue of Fully Convertible Debentures (FCDs).
Sebi in a show cause notice had alleged that Monnet Ispat had failed to convert the FCDs into equity shares even after the expiry of 18 months from the date of allotment of the securities which was in violation of (Issue of Capital and Disclosure Requirements Regulations.
In a order today, the Securities and Exchange Board of India (Sebi) ruled that "the charges leveled against the noticee viz Monnet Ispat & Energy Limited do not stand established and the matter is, accordingly, disposed of".
According to the regulator, the company "had taken all bonafide steps for clarification from the stock exchanges ... and also from a legal jurist to enable it better understand the obligation put on the FCD/Warrant holders and go ahead with the conversion of the said FCDS/ warrants".
"However, as the exchanges and the legal opinion of the eminent jurist required the noticee to adhere to the order of the High Court...The noticee was not in a position to convert the said FCDs/ warrants into equity shares," it added, among other observations.
Monnet Ispat, listed on the BSE and the National Stock Exchange, had sought clarification/no objection certificate to allow allotment of shares after expiry of 18 months from the date of allotment of FCDs.
Sebi had also received a complaint on October 11, 2013 from one Vistabrook Limited against the company for non-conversion of the FCDs into equity shares.
Sebi noted, among others, that an erstwhile group company of Monnet Ispat had allotted 17.50 lakh FCDs to Vistabrook, a foreign strategic investor, on November 21, 2009 for a consideration of Rs 52.20 crore.
In accordance with the terms of the agreement, the FCDs were to be converted automatically on expiry of 18 months.
