Case: Adjudicating Order in respect of Rose Zinc Limited

Violation of: Regulation 13 (6) of SEBI (Prevention of Insider Trading) Regulations, 1992 herein after referred to as 'SEBI ( PIT ) Regulations ,1992'.

Parties: Rose Zinc Limited (hereinafter referred to as the 'Company' or ‘Noticee’);

              Ashok Kumar Mehta - Promoter - Director of the Company

              Pavan N Mehta - Promoter of the Company

              Kiran P Mehta - Promoter of the Company

Facts of the case:

1.       Changes in Shareholding pattern

Sr. No	Name of Promoter	As on 31.03.2015 (Number of shares & percentage out of total share capital)	As on 30.06.2015 (Number of shares & percentage out of total share capital)
1.	Ashok Kumar Mehta	1748800 (21.64%)	29704470 (36.75%)
2.	Pavan N Mehta	1045040 (12.93%)	21500 (0.27%)
3.	Kiran P Mehta	198100 (2.45%)	Nil

The changes in shareholding were through inter- depository/off-market transfer of shares.

2.      Disclosure to the Company:

The Promoters were required to give disclosure to the Company under regulation Reg. 13(3), 13(4) 13(4A) read with 13(5) of SEBI (PIT) Regulations 1992 as applicable.                      Mr. Ashok Kumar Mehta made disclosure to the Company. However, Mr. Pavan N Mehta & Ms. Kiran P Mehta failed to make disclosures to the Company.

  

3.      Disclosure to the Exchange:

The Company was in turn required to make disclosure to Exchange within 2 working days under regulation 13 (6) of SEBI (PIT) Regulations 1992. However, the Company submitted information to the exchange after approx. 9 months via email and through India Post on              2 July 2015.

4.      Issues

The following issues were raised for consideration:

a.       Whether the noticee has violated the provisions of Regulation 13(6) of SEBI(PIT) Regulations, 1992?

b.      Does the violation, if any, attract monetary penalty under Section 15 A (b) of SEBI Act 1992?

c.       If so, what would be the monetary penalty that can be imposed taking into consideration the factors mentioned in 15 J of SEBI Act 1992 ?

1. 5.  Arguments

 The Plea of the promoters was that since the shares were transferred inter se and did not result in overall increase in shareholding of the promoters and they were of the belief that there was no requirement to make disclosures. However, when the non-disclosure was pointed out in the show cause notice, they made the necessary disclosures. There was no malafide intention and there was no change in the overall share holding of the promoters of the Company.   

1. 6. Adjudication Order

a.       In case of Mr. Pavan Mehta & Ms. Kiran Mehta the Noticee cannot be held liable for not making disclosures as the Noticee did not receive any disclosures from them. However, Mr. Ashok Mehta made disclosure to the Company. The noticee was required to make the said disclosure within 2 working days. However, the Noticee submitted delayed disclosures.

The Noticee, is therefore liable to a monetary penalty under section Sec 15A(b) of SEBI Act, 1992 for violation of Regulations 13(6) of SEBI(PIT) Regulations,1992.

b.      Section 15A (b) of SEBI Act 1992:

15 A Penalty for failure to furnish information , return etc.

If any person ,who is required under this Act or any rules or Regulations made there under -

b) to file any return or furnish any information ,books or other documents within the time specified therefor in the Regulations, fails to file return or furnish the same within the time specified therefor in the Regulations he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees , whichever  is less.

It was held that noticee was liable for monetary penalty u/s Section 15 A (b) of SEBI Act 1992 for violation of regulation 13(6) of SEBI(PIT) Regulations,1992     

c.       As per Sec 15I of the SEBI Act read with Rule 5 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules , 1995  penalty of Rs. 1,00,000/- was imposed on the Noticee.