The Hindu Business Line : SEBI fines Birla Mutual for non-compliance

THE Securities and Exchange Board of India has booked Birla Mutual Fund for not complying with key provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. A penalty of Rs 75,000 has been imposed.

Birla MF was found to have acquired over 2.5 lakh shares of Subex Systems Ltd (SSL) in 1999 under various schemes, constituting 7.06 per cent of the SSL's paid-up capital. This entitled it to exercise more than 5 per cent of the voting rights of the company, an order passed by SEBI says.

The acquirer failed to make the necessary disclosures to SSL about the acquisition, within the period prescribed under Regulation 7(1) and (2) of the takeover norms.

Adjudication proceedings were initiated against Birla MF by the regulator and a show-cause notice was issued.

Birla MF pointed out that, as per the half-yearly audited report for September 30, 1999, the share capital of SSL appearing in the balance sheet was Rs 31,92,1000 and hence 5 per cent of the share capital amounted to Rs 15,96,050. None of the schemes crossed the 5-per cent limit as on that date.

Subsequently, SSL made a preferential allotment of 3,30,800 shares, in which Birla Advantage Fund was allotted 30,000 shares. As a result, the scheme crossed the limit.

Hence, exceeding the limit was not due to fresh purchase but a consequence of the preferential allotment done by SSL.

A personal hearing took place earlier this month, in which Birla MF officials deviated from their earlier stand and admitted they had not complied with Regulation 7(1) and (2).

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