BSE asks Kirloskar group to explain non-disclosure of family deed and SEBI’s show-cause notice

The Bombay Stock Exchange has issued a notice to the Kirloskar Group companies with regard to non-disclosure of the deed of family settlement (DFS) and a show cause notice that was issued by market regulator SEBI to the promoters for insider trading and fraud. The notice, seen by BusinessLine , seeks comments from companies including Kirloskar Industries, Kirloskar Brothers and Kirloskar Oil Engine on its non-disclosure to the shareholders.

Stock exchanges are tasked to seek company responses on disclosure related matters. It is to ensure that key information does not remain hidden from shareholders. NSE did not respond to BusinessLine ’s email.

Pune’s Kirloskar family is in dispute over the division of family assets and cases are on in the National Company Law Tribunal (NCLT). The DFS document talks about distributing the assets including company shares and other cash and investments. Reportedly, it has been part of the NCLT cases. But its disclosure was never made to the shareholders. Also, disclosure of a December 2019 show-cause notice issued by SEBI against Rahul and Atul Kirloskar led promoters is under question.

Also read: Rahul Kirloskar unnecessarily casting aspersions on my integrity: Kishor Chaukar tells NCLT

SEBI’s norms specify disclosure of “agreements (viz. shareholder agreements, joint venture, agreements, family settlement agreements, to the extent that it impacts management and control of the listed entity, agreements/treaties, contracts with media companies, which are binding and not in the normal course of business, revisions or amendments and terminations.”

SEBI states events “shall be disclosed without any application of the guidelines for materiality.” Thus SEBI SCNs to promoters are also material, legal experts say.

Also read: Kirloskar feud: Chaukar ousted from KBL board

Recently, SEBI has asked companies to disclose even initiation of forensic audit and its final report.

“Neither KIL nor to the best of its knowledge any other group company is party to the DFS, which was executed in 2009. None has subsequently ratified, adopted or otherwise incorporated the DFS in its articles. Therefore, authority was neither sought nor granted by any of the group companies authorising execution of the DFS on behalf of any group company. (On SCN), we have responded appropriately to the stock exchange. Since the matter is ongoing, it is inappropriate to disclose the reply to media,” KIL said.

“KBL had promptly responded to BSE vide letter dated October 15, 2020 stating that the Board of KBL had on April 18, 2016 noted the DFS, discussed the same and passed the resolution in relation thereto. In fact, KBL by its letter dated April 19, 2016 had made disclosure of the DFS pursuant to Reg 30 (2) of SEBI (Listing Obligations and Disclosure) Regulations, 2015 to both the BSE and NSE. Since the other matters referred to in the email of the BSE didn’t concern KBL, KBL hasn’t dealt with it,” KBL said in its response.

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