Promoters and promoter group of a listed engineering company were found to have reduced their shareholding to nearly a fourth between July 2020 and November 2020, without disclosing them as required under Takeover Regulations.
The four entities reduced their shareholding in A&M Febcon Limited (AMFL) from 59.23 percent to 15.25 percent over 15 transactions, each transaction reducing their shareholding by more than 2 percent, which is the disclosure threshold under the regulations.
The promoters and promoter group have been fined Rs 16 lakh by the market regulator on December 15, for not disclosing these 15 transactions and another 'buy' transaction, which came earlier in June 2020.
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The order issued by the Securities and Exchange Board of India (Sebi) could not be served because the noticees have largely been uncommunicative. As the order noted, two of the noticees — Zalak Purvesh Parikh and Devabhai Nagjibhai Desai — did not reply to the regulator's notices and did not attend the hearing, and the other two — Renukaben Rameshbhai Shah and Varun Jigneshkumar Shah — attended the hearing but did not reply to the showcause notice.
As the order stated, "As it has been established that the Noticees have violated Regulations 29 (2) read with 29(3) of the Takeover Regulations, Noticees are liable for payment of a monetary penalty in terms of Section 15A(b) of the SEBI Act."
It added, "The material available on record has not quantified the amount of disproportionate gain or unfair advantage, if any, made by the Noticees (the promoters and the promoter group) and the loss, if any, suffered by the investors as a result of the Noticee's failure."
In October 2021, the company's statutory auditors had resigned saying that the management was not giving enough information.
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Their resignation letter to the company's board read, "Due to the continued failure by the management to furnish requisite information for audit, we are not in a position to continue as an auditor".
It added, "So, we are submitting our resignation as Statutory Auditors of the company with immediate effect".
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