Breaking News SEBI imposes fine of Rs 25 cr on RIL,...

SEBI imposes fine of Rs 25 cr on RIL, Mukesh Ambani for devious trading

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New Delhi, Apr 8 (ILNS) The Securities and Exchange Board of India (SEBI) today imposed a penalty of Rs 25 crore on the Reliance Industries Limited (RIL) and its Chairman Mukesh Ambani for devious trading.

The fine was imposed on the family led by both Mukesh Ambani and his younger brother Anil Ambani, which includes their mother Kokilaben Ambani, Nita Ambani, Tina Ambani and and their children.

In January 2000, the RIL had issued Rs 12 crore equity shares to 38 allottee entities. The allotment was made consequent to the exercise of the option on warrants attached with non-convertible secured redeemable debentures (NCD) issued in 1994.

However, the promoter group failed to make an open offer, as mandated under the Substantial Acquisition of Shares and Takeovers (SAST) Regulations, 1997. The RIL promoters and the Persons Acting in Concert (PAC) failed to declare the acquisition of more than five percent stake in the company back in 2000.

Mukesh and Anil Ambani split the empire of their father Dhirubhai Ambani, according to the 85-page SEBI order. During the period between November 1 to 29, 2007, various transactions were undertaken by RIL in the cash segment and by RIL through the agents in the F&O segment. From November 15, 2007 onwards, RIL’s short position in the F&O segment constantly exceeded the proposed sale of shares in the cash segment, it noted.

The order passed by K Saravanan, Adjudicating Officer of the SEBI, said, “The acquisition of shares, which gives rise to voting rights thereon, is a continuous contravention of the bar in law contained in Regulation 11 as the Acquirers and Persons acting in Control are not ‘entitled’ in law to lawfully exercise the voting rights based on such a null and void acquisition.

“This cannot be considered as anything, but a continuing failure to give the public announcement of the open offer as required under Regulation 11(1) of the Takeover Regulations. No quantifiable figures or data are available on record to assess the disproportionate gain or unfair advantage and amount of loss caused to an investor or group of investors as a result of the default committed by the noticee,” noted the SEBI.

Referring to Section 8 of the Hindu Minority and Guardians Act, the SEBI held that Mukesh and Anil were the natural guardians of their children. Hence, they were liable on account of violation in respect of the shares held by their children, who were minors on the date of violation.

On February 24, 2011, SEBI issued showcause notices to the promoters of RIL. In August 2011, some of the entities filed settlement applications. On May 15, 2020, SEBI rejected their settlement applications.

In its reply to SEBI, the RIL had argued that the initiation of adjudication proceedings in this case with a huge inordinate delay was “unreasonable, arbitrary and causes substantial prejudice to the noticees”.

“The amount of profits made out of such failure has not been brought out in the available records for computing the amount of penalty in terms of Section 15H of the SEBI Act, 1992, the Court noted.

“In the event of failure to pay the said amount of penalty within 45 days of the receipt of this Order, SEBI may initiate consequential actions, including but not limited to recovery proceedings under Section 28A of the SEBI Act, 1992 for realisation of the said amount of penalty along with interest thereon, inter alia, by attachment and sale of movable and immovable properties,” the order concluded. ILNS/SNG/RJ

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