Som Distilleries and Breweries fined Rs 5 lakh for violating LODR Regulations

The company had announced on December 15, 2022, an extra-ordinary general meeting (EGM) for approval of two resolutions, which was later cancelled.

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26 Aug, 2025 12:21

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The market regulator has fined Som Distilleries and Breweries Rs 5 lakh for violating the Sebi (Listing Obligations and Disclosure Requirements) Regulations (LODR Regulations).

The Securities and Exchange Board of India (Sebi) received a SCORES complaint on the company possibly violating the said regulations, from inadequate / non-disclosures by the company regarding proposal of fund raising. The market regulator conducted an examination of the company's affairs between December 9, 2022, and February 2, 2023.

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The company had announced on December 15, 2022, an extra-ordinary general meeting (EGM) for approval of two resolutions--Issue of convertible equity warrants to promoters / promoters group on preferential basis; and appointment of an independent director, Rajesh Kumar.

However, on January 2, 2023, the company announced that the EGM was cancelled due to "unforeseen/unavoidable circumstances". The Sebi order said this announcement was inadequate and ineffective.

The order stated, "The fundamental premise of a disclosure is to make available information to shareholders in order to make a well informed decision. The aforesaid corporate announcement made to stock exchanges was without any detailed reasoning as regards to the circumstances leading to cancellation of EGM."

Later, in reply to Sebi's queries, the company stated that "the Board approved the decision of cancellation after assessing the needs of the Company for additional funds."

The Sebi order added more from the reply: "It was felt that there is a lesser need of funds due to strong accruals at that point in time due to which it was proposed to cancel the preferential issue of warrants to the Promoters. Hence the resolution was passed for the cancellation of EGM for approval of 65 lakh warrants to the promoters. Instead, it was decided that the Company will continue with the right issue to give the existing minority investors the opportunity to be a part of the growth story of the Company."

As the Sebi order noted, all of the above was not mentioned by the company in their disclosure dated January 3, 2023, made to the public via the stock exchanges.

Also read: SEBI grants exemption to Shakti Pumps' promoters to transfer shares to a trust without open offer

The order added, "It was only much later that too in its earnings conference call on January 27, 2023 with regards to the financial results for the third Quarter of financial year 2023, that during the introductory message to investors, Mr. Nakul Sethi, Director – Finance and Strategy addressed the concerns of the investors on cancellation of the EGM."

Besides that, the company also did not give any reasons about the validity of the proposed resolutions, said the order.

Given all this, the regulator has found that the company has not adhered to the principles governing disclosures and obligations as laid
down under the LODR Regulations.