Sebi case against dead man finally closed

Mumbai: Markets regulator the Securities and Exchange Board of India (Sebi) last week closed a case against late industrialist Bhadrashyam Kothari, 20 years after initiating a probe against him for alleged violation of its takeover code and five years after his death.The matter pertains to allotment of shares of Reliance Industries (RIL) against warrants to Kothari, the brother-in-law of RIL chairman Mukesh Ambani, in January 2000 which were not disclosed to the regulator.According to Sebi’s takeover code, promoter groups have to disclose any significant increase in their shareholding.The first show-cause notice in the case was issued in 2011 — 11 years after the probe began.Kothari had filed for settlement of the offence through the consent route in 2011, but the application was not taken up for nine years. In May this year, Sebi rejected the consent application filed by Kothari.Since the accused is no longer alive, the case has been closed.Sebi issued two show-cause notices to Kothari — one under the name BH Kothari and another to Bhadrashyam Kothari. The regulator later concluded that both referred to the same individual. The show-cause notices were since dropped.Kothari headed the HC Kothari Group – an industrial conglomerate that had wide-ranging interests in sugar, chemicals and petrochemicals, among others.“I am of the view that the instant proceedings deserve to be abated against Late Bhadrashyam Harshad Kothari. Therefore, the instant adjudication proceedings initiated against him…is disposed of accordingly without going into the merits of the case,” said Sebi’s adjudication officer K Saravanan in the order dated September 30.In 1994, Reliance Industries issued Non-convertible Debentures (NCDs) worth ₹300 crore to 38 entities, including Kothari. These warrants were exercised in January 2000 and RIL allotted 12 crore shares to the entities against the debentures. Sebi observed that promoters of RIL, along with related entities, increased their stake in the company by 6.83%.According to the rules of the takeover code that were in force at the time, any promoter group acquisition of more than 5% stake in the company had to be disclosed prior to the purchase transaction.Sebi had alleged that Kothari did not make any such public announcement.

from Economic Times https://ift.tt/3l8pglu