News By/Courtesy: Parimala Ronanki | 10 Apr 2021 18:47pm IST


  • SEBI fines Ambani brothers.
  • set decree not followed.
  • response of Ambani family.

The security exchange board of India imposed an Rs. 25 Cr penalty on the promoters of the reliance technology including Mukesh Ambani. This has been imposed because in January 2000 in the promoter's stake the promoters have issued the shares from their company itself which were issued before January 2000. Basically, after some conversions of some warrants were issued as early as 1994. So, here the question that arises is what are company warrants? A warrant is a certificate or security like if anyone buys the warrant then he gets rights in a future date they can covert the warrant into share. Companies’ warranties are the securities issued by a company usually during the fresh offer of shares. Warranty holders can convert them into equity shares within the set period given to them. So, here what happened is the reliance company since 1994 has issued many warrants and these warrants are being brought by the promoters. And these warrants were converted into shares. So, their share is 49.9% but now they bought more shares. So, in this way, their stake has been increasing beyond. Ruleset not followed by the reliance. Under substantial acquisition of shares and takeover regulation 1997, if a promoter acquires over 5% of the voting rights in a year then they need to make an offer to the minority investors that allows them to exit the company. So, here they did not give the minority shareholder the offer. They simply converted the warrant into equity share. Here 1999 march-2000 march that is between one financial year the promoters of reliance limited has acquired 6.83% stake in the company. So here this is more than the set standards. Before converting them into shares the promoters are required to ask the general public whether they want to sell their share or not. If they accept then only, they can covert their share. So because of not following this set standard, the SEBI has imposed a 28cr penalty to pay. The regulator said that the penalty will have to be paid jointly by the 34 individuals named in the SEBI order including the mother and children of Mukesh Ambani and Anil Ambani, within 45 days. Response of the Ambani family – regarding the issue. Ambani family in its reply to the regulators said that the issue of the warrants and issue of the shares on the conversion of warrants were not subjected to the SEBI takeover regulations. They also said that the delayed insurance of a shows cause notice and adjudication of the proceedings in the case was unreasonable, arbitrage, and cause subsequent prejudice to them.


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Section Editor: 5thVoice.News | 12 Apr 2021 4:59am IST

Tags : #SEBI#regulations#fine.

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