The Securities and Exchange Board of India (SEBI) has issued a warning to billionaire Anil Agarwal-led Vedanta for executing related-party transaction worth ₹1,407 crore without prior approval of the audit committee.

The company’s independent auditor and secretarial auditor had flagged the related-party transaction issue in the company’s annual report for FY21.

No prior approval

Referring to the opinion in respect of the company executing related-party transactions worth ₹1,407 crore without prior approval of the audit committee, SEBI, in a letter dated October 28, noted that the company has submitted that the said transaction was ratified later (after 47 days). The company further submitted that the said transaction was done at arm’s length and in ordinary course of business.

However, the market regulator underscored that Regulation 23(2) of SEBI (LODR) Regulations, 2015, states that all related-party transactions shall require prior approval of the audit committee.

‘Ensure compliance’

With regard to secretarial auditor’s observation on the delay in disclosure of outcome of the board meeting dated October 3, 2020, the company submitted that the delay was due to unforeseen circumstances and that it will ensure that the same is not repeated, according to SEBI’s letter. “The aforesaid non-compliances are viewed seriously. You are hereby warned and advised to ensure compliance with all applicable provisions of SEBI regulations. Any such aberration in future would be viewed seriously sand appropriate action would be initiated,” said the regulator in the letter.

SEBI directed Vedanta to place its letter before the company’s Board and disseminate the same to stock exchanges. Vedanta, in a filing to stock exchanges, said that the firm’s Board at its meeting held on October 29 took note of SEBI’s letter. The Board has advised the company to ensure adherence to all applicable provisions.

Related Topics
comment COMMENT NOW