The Hindu Business Line : SEBI imposes cash penalty on Xedd Telecom

SEBI has imposed a cash penalty on Xedd Telecom Ltd (XTL) for its failure to comply with regulations pertaining to appointment of common agency to handle the share registry work of both physical and dematerialised shares.

In terms of the SEBI regulations, it is imperative for all issuer companies to appoint a common agency to handle the share registry work relating to both the physical and dematerialised shares of the company either in-house or through a SEBI-registered registrar and share transfer agent (RTA). According to SEBI orders issued last week, it had failed to comply with the regulations despite repeated opportunities provided to it. The market regulator said despite granting XTL sufficient opportunities, they not only failed to respond to any of the notices but also failed to provide any proof of their compliance of 53A of the Regulations.

Further, according to SEBI, the company had also failed to establish connectivity with both the depositories (NSDL and CDSL) to facilitate dematerialisation of their shares and had also not entered into tri-partite agreements with NSDL and CDSL or appointed a common share agency.

The company even kept themselves away from the hearing proceedings conducted by SEBI.

While acknowledging that it was not clear as to whether XTL enjoyed any gain or unfair advantage as a result of the default, the regulator, however, said that it could not be denied that the said default would have certainly caused a certain amount of disadvantage to their shareholders and the investor class as a whole.

Moreover, the SEBI order said the default is continuing till date. Viewing that although the penalty need not be imposed in terms of the provision provided in Section 15HB of the Act, the Adjudicating Officer felt that the imposition of a token penalty was very much necessitated.

In its order dated February 14, the regulator said the penalty amount should be paid within a period of 45 days from the date of receipt of the order.

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