Co tries to delist for nearly a third of its book value; Sebi fines co and its independent directors

The regulator started an examination into Hexa Tradex after receiving a complaint about an attempt to delist the company.

A company and its independent directors who gave the go-ahead for a delisting proposal that offered only about a third of the company's book value has been fined by the market regulator.

An order dated June 18, issued by the Securities and Exchange Board of India (Sebi), fined Hexa Tradex Rs 5 lakh and its independent directors Raj Kamal Aggarwal, Ravinder Nath Leekha, Vinita Jha and Girish Sharma Rs 2 lakh each, for violating Delisting Regulations.

It also fined acquirers Siddheswari Tradex P Ltd, Innox Global Multiventures P Ltd, Opelina Sustainable Services P Ltd and JSL Limited Rs 5 lakh each, and fined the compliance officer Pravesh Srivastava Rs 2 lakh.

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The regulator started an examination into Hexa Tradex after receiving a complaint about an attempt to delist the company.

During the examination, the regulator found that Committee of Independent Directors (IDC) had not given a reasoned recommendation for the delisting proposal put forward by the acquirers.

The acquirers had calculated the floor price as Rs 153.16 per share and the indicative price offered as Rs 156. As the Sebi order noted, there was no reason given for the IDC accepting this indicative price, which was much lower than the book value of the company of Rs 425.53 per share.

The regulator's officials also found that the company, acting through its Board of directors, had not questioned the IDC for its failure to provide reasoned recommendations.

The order also noted how the company's independent directors failed to show care/diligence/skill and failed to conduct their duties in a professional manner by passing an incorrect resolution saying that the company and the acquirers were in compliance with securities law.

This is because the resolution was passed in March 2022, barely a month-and-a-half after the company received a showcause notice from the regulator on wrong categorisation of promoters as public shareholder.

Sigmatech, which hold 10.9 percent of the company, was wrongly classified as a public shareholder from the time of the company's listing till June 2018. It was recategorised as promoter group from September 2018.

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On February 1, 2022, the regulator issued a showcause notice to the company for incorrect classification of promoters in the past stock-exchange filings, after which the company decided to try and settle with the regulator.

On March 12, 2022, the acquirers approached the stock exchanges for the delisting of the company and a firm of company secretaries certified that due diligence for delisting had been done. On March 21, 2022, the company's Board passed the delisting resolution.