Markets regulator Sebi on Wednesday disposed of a show cause notice that was issued to Housing Development & Finance Corporation (HDFC) with respect to alleged violations of share transfer agent norms.
The watchdog had conducted an inspection of HDFC, which was registered with the regulator as Category II Registrar to an Issue and Share Transfer Agent, on September 30 to October 9, 2019, for the period April 1, 2018 to July 30, 2019.
It was alleged that HDFC had violated certain provisions of listing obligations and disclosure requirements regulations and/or norms pertaining to Registrars to an Issue and Share Transfer Agents.
Passing an order on Wednesday, Sebi's Adjudicating Officer Geetha G said that no monetary penalty is warranted in respect of the allegations levelled in the instant matter and disposed of the show cause notice that was issued in December 2021.
According to the order, out of the allegations made in the show cause notice, the noticee (HDFC) was in violation of two aspects -- pertaining to issuance of duplicate shares and deviation from prescribed procedures in case of transfer of dividends.
"The noticee has submitted that it had taken corrective measures pursuant to the deficiencies being pointed out by Sebi, interalia including updation of SOP and appointment of an external auditor for examining cases outside of the sample analysed by Sebi.
"Further, the noticee has already surrendered its Category II Share Transfer Agent Registration to 'Link Intime India Pvt Ltd'. Thus, on an overall evaluation of the allegations and other circumstances, I find that the aforesaid non-compliances are not serious enough to warrant imposition of monetary penalty," the order said.
According to Sebi, in the case of procedures to be followed in issuance of duplicate shares, the noticee had taken a considered call not to insist on the same and vested the discretion on its compliance officer to waive the requirement of FIR.
Noting that this is not a case of deliberate or casual non-compliance but a facilitation done to the shareholders at the behest of the Stakeholder Relationship Committee, Sebi said this would ensure that the duplicate share certificates are not issued to the wrong persons.
"It is not out of place to observe that there are instances where the investors have faced difficulties in lodging an FIR. Therefore, in my view, deviation from the strict letter of law can be looked upon as a venial or technical or procedural violation," the order said.
With respect to deviation from following the procedures laid down with respect to online transfer of dividends, the adjudicating officer said the RTA has systematically disbursed the dividends through the physical mode. "I also note that the noticee was functioning as an In-house RTA.
In view of this, I would like to take a lenient view and not consider this as a serious lapse on the side of the noticee," she added.