Sebi penalises Reliance Home Finance Rs 8 lakh for violation of LODR Regulations

The Sebi order noted the company's materiality policy that requires transactions whose value exceeds 10 percent of the gross income of the company to be reported to the exchange.

The market regulator has penalised Reliance Home Finance Ltd (RHFL) Rs 8 lakh for violating Sebi (Listing Obligations and Disclosure Requirements) Regulations or LODR Regulations.

An order issued by the Securities and Exchange Board of India (Sebi) on May 17 stated that the company has been penalised earlier too for the violations of provisions of LODR Regulations and thus "the violation is repetitive in nature".

In this current order, the regulator noted that the company had failed to disclose material events related to a petition filed by IDBI Trusteeship Services Limited (ITSL) with the National Company Law Tribunal (NCLT) and had delayed disclosures related to an inter-creditor agreement (ICA).

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ITSL had filed the petition seeking NCLT's direction to RHFL to redeem secured non-convertible debentures and make related payments, including principal amount and interest, that totalled to more than Rs 2,850 crore.

While the company had disclosed the filing of the petition to the exchanges, it had not disclosed the NCLT direction asking it to pay the interest and principal for redemption of the debentures. It had also not disclosed it and Bank of Baroda (as the lead bank on behalf of inter-creditor agreement lenders) disputing the order by filing an appeal before the National Company Law Appellate Tribunal (NLAT).

The Sebi order noted the company's materiality policy that requires transactions whose value exceeds 10 percent of the gross income of the company to be reported to the exchange. As of FY21, the company's gross income was Rs 162 crore. Therefore, the amount with respect to the NCDs was above the materiality treshold.

With regard to the ICA, the Sebi order noted a delay in reporting invitation of expression of interest bid, and approval of resolution plan.

The invitation was sent out via newspapers on July 29, 2020; and the approval for the resolution plan was granted on June 19, 2021. These had been disclosed by July 30, 2020; and June 20, 2021 respectively. But the company made the disclosures on July 31, 2020, and June 21, 2021, respectively.