TaxTMI 
TaxTMI 
2020 (7) TMI 238
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....omani had acquired 31,680 shares of Svaraj Trading and Agencies Ltd. (hereinafter referred to as 'the company') by way of inter se transfer between the promoters i.e. from two other promoters, namely, Shree Satyanarayan Properties Pvt. Ltd. and Kramer Pharmaceuticals Pvt. Ltd. He also was a promoter of the company during the relevant period. This acquisition of shares had increased the shareholding of the appellant No. 1 Susheel Somani from 0.35% to 31.68%. Since the shares were acquired without making any public announcement as stipulated under Regulation 3(1) read with Regulation 13(1) of the SAST Regulations, 2011, it was alleged by the respondent SEBI that the Appellant No. 1 has violated the provisions of Regulation 3(1) read with Regulation 13(1) of the SAST Regulations, 2011. 3. It was also alleged that such acquisition of the shares by appellant No. 1 Susheel Somani led to the increase in the collective shareholding of all the appellants - the promoters, from 29.42% to 61.10% which was more than threshold limit of 5%. Therefore, all the appellants were required to make public announcement as stipulated under Regulation 3(2) read with Regulation 13(1) of the SAST ....
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....ar, Mr. Aditya Bhansali, the learned counsel for the Appellants and Mr. Kumar Desai, the learned counsel with Mr. Kaushal Parsekar, Ms. Tanvi Rana, the learned counsel for the Respondent. 9. Regulation 3(2) and Regulation 13(1) of the SAST Regulations 2011 are as under :- "3(2). No acquirer, who together with persons acting in concert with him, has acquired and holds in accordance with these regulations shares or voting rights in a target company entitling them to exercise twenty-five per cent or more of the voting rights in the target company but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such target company entitling them to exercise more than five per cent of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations: Provided that such acquirer shall not be entitled to acquire or enter into any agreement to acquire shares or voting rights exceeding such number of shares as would take the aggregate shareholding pursuant to the acquisition above the maximum permi....
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.... (iv) promoters and members of the promoter group; (v) immediate relatives; (vi) a mutual fund, its sponsor, trustees, trustee company, and asset management company; (vii) a collective investment scheme and its collective investment management company, trustees and trustee company; (viii) a venture capital fund and its sponsor, trustees, trustee company and asset management company; [(viiia) an alternative investment fund and its sponsor, trustees, trustee company and manager;] (ix) 5 [***] (x) a merchant banker and its client, who is an acquirer; (xi) a portfolio manager and its client, who is an acquirer; (xii) banks, financial advisors and stock brokers of the acquirer, or of any company which is a holding company or subsidiary of the acquirer, and where the acquirer is an individual, of the immediate relative of such individual: Provided that this sub-clause shall not apply to a bank whose sole role is that of providing normal commercial banking services or activities in relation to an open offer under these regulations; (xiii) an investment company or fund and any person....
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....on; (iii) a company, its subsidiaries, its holding company, other subsidiaries of such holding company, persons holding not less than fifty per cent of the equity shares of such company, other companies in which such persons hold not less than fifty per cent of the equity shares, and their subsidiaries subject to control over such qualifying persons being exclusively held by the same persons; (iv) persons acting in concert for not less than three years prior to the proposed acquisition, and disclosed as such pursuant to filings under the listing agreement; (v) shareholders of a target company who have been persons acting in concert for a period of not less than three years prior to the proposed acquisition and are disclosed as such pursuant to filings under the listing agreement, and any company in which the entire equity share capital is owned by such shareholders in the same proportion as their holdings in the target company without any differential entitlement to exercise voting rights in such company: Provided that for purposes of availing of the exemption under this clause,- (i) If the shares of the target company are frequently tra....
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....ition, shares given upon release of encumbrance shall be treated as a disposal, and disclosures shall be made by such person accordingly in such form as may be specified: Provided that such requirement shall not apply to a scheduled commercial bank or public financial institution as pledgee in connection with a pledge of shares for securing indebtedness in the ordinary course of business." 13. It is an admitted fact that the appellants have made requisite disclosures on 7th day as against the provisions of Regulation 29(3) that the disclosures are required to be made within two working days. Thus, technically the appellants were not exempted from making public announcement and, thus, are in violation of the relevant regulations. The AO has observed that as the condition of making disclosures within two working days is not fulfilled, the act was not fit for grant of exemption. In the circumstances, the penalty was imposed. 14. While determining the quantum of penalty, the AO has taken into consideration the provisions of Section 15J of the Securities and Exchange Board of India Act, 1992 which reads as under :- "15J. While adjudging quantum of penalty under s....