Sun Pharma, Dilip Singhvi settle funds diversion case with SEBI

Our Bureau Mumbai | Updated on February 11, 2021 Published on February 11, 2021

Sun Pharmaceuticals Industries and its founder and MD Dilip Singhvi have settled a case with market regulator SEBI with regard to allegations of funds diversion. Others who have settled the case include Sudhir Valia, Uday Baldota, and Sunil Ajmera.

Sanghvi will have to pay ₹62.35 lakh to SEBI and Sun Pharma ₹56 lakh to settle the case. SEBI allows settlement of cases without acceptance or denial of guilt.

Related-party deal

The whistleblower in his letter to SEBI had alleged that Sun Pharma and its wholly owned subsidiary, Sun Pharmaceutical Laboratories, had been diverting funds through Aditya Medisales Ltd (AML), its sole distributor in India. The letter had further alleged that transactions with AML were ongoing for several years. But, AML was disclosed as a related party of Sun Pharma only in the financial year 2017-18.

SEBI conducted a forensic audit and on investigating the matter, found that AML was a related party of Sun Pharma even before the scheme of amalgamation, and that Sun Pharma had not made the relevant disclosures. Considering that the transactions with AML would have qualified as material related party transactions, it required approval of shareholders, the SEBI order had said.

“Disclosure of related party transactions with AML in the annual reports for FY 2015-16 and FY 2016-17, was not made,” SEBI observed.

“Since a company acts through its board of directors and the directors are responsible for all the acts of omission and commission by the company. In view of the same, Shri Dilip Shanghvi was in-charge of its operations and decision making process, therefore, it was observed that the Applicant had violated the provisions of regulations 4(2)(f), 23(2) and 23(4) of SEBI (LODR) Regulations, 2015,” the SEBI order said.

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Published on February 11, 2021
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