Sebi revokes restrictions on Essar Ports

Market regulator Sebi on Monday revoked the restrictions it had imposed on Essar Ports as well as its directors and promoters for not meeting the minimum public shareholding norms, as the company has now complied with the directions.

Securities and Exchange Board of India (Sebi) whole-time member Prashant Saran in an order said that as Essar Ports "has now complied with the MPS (minimum public shareholding) norms, I do not propose to initiate further action against the company, its directors, promoter and promoter group, as contemplated in...the interim order.

"Hereby revoke the directions issued vide the interim order dated June 4, 2013 against the company, Essar Ports Ltd, its directors, promoters and promoter group, with immediate effect."

In an June 4 order, the market regulator had imposed various restrictions on 105 firms including Essar Ports and their promoters and directors for not achieving the minimum 25 percent public holding within the June 3 deadline. Sebi had frozen the voting rights and corporate benefits of promoters/directors of these companies and barred them from holding any new position on boards of listed firms, among others.

It had also warned of further actions including levy of monetary penalties, initiation of criminal proceedings and restricting the trading activities of related stocks. Essar Ports in its submissions to Sebi said that in order to comply with the norms, it had undertaken an 'offer for sale' to sell its promoter shares following which the public holding in the firm increased to 20.96 per cent.

Further, the company said that it had received Sebi's approval to convert 52,666 global depository shares (GDS) held by Port of Antwerp International UK Ltd. On conversion, GDS could be included as part of the public shareholding. The GDS constituted 4.07-percent stake on a diluted basis.

As per Essar Ports, the conversion was delayed due to "various administrative issues" and was completed only on June 20, 2013. However, the public holding rose to 25.03 percent following the conversion, as required under the norms.

Sebi noted that Essar Ports had become compliant only on June 20 as against the due date of June 3, 2013. "...for such non-compliance within the stipulated time-frame, it is necessary and proper that I warn the company and advise it to ensure compliance with all the applicable laws and regulations administered by Sebi, in letter and spirit," Saran noted.