Reliance companies banned
MUMBAI: Market regulator Securities & Exchange Board of India (Sebi) on Friday barred two Anil Ambani group companies, Reliance Infrastructure (R-Infra) and Reliance Natural Resources Ltd (RNRL), from investing in the secondary markets till December 2012 for alleged unfair market dealings. Ambani and four senior executives face a similar ban that ends this December.
In addition, a penalty of Rs 50 crore was imposed on the companies, the executives and Ambani. The executives include Satish Seth, S C Gupta, J P Chalasani and Lalit Jalan, Sebi said in an order posted on its website.
The regulator said the companies and the executives paid the penalty "without admitting or denying the charges".
An R-Infra spokesperson said the Sebi order did not bar the companies from raising money from the market through equity or equity-linked instruments, but these companies could not invest in stocks of other companies. Also because RNRL has since been merged with R-Power, the spokesperson said, R-Power will not be covered by the order. In its order, Sebi said the consent terms would apply to "surviving corporate entities should any of the corporate applicants (RNRL or R-Infra) undergo any change on account of merger, amalgamation or restructuring or any other similar corporate action".
The R-Infra spokesperson said the companies had voluntarily settled the matter with the regulator, with no admission or denial of guilt. The "settlement (was) made in (the) interests of investors to pre-empt unnecessary and time-consuming litigation", the spokesperson said.
On payment of the penalty, the R-Infra spokesperson said the directors had already paid the Rs 50 crore settlement charge, and "the settlement with Sebi was arrived at no cost to the companies". This means the two companies, R-Infra and R-Power, did not have to pay the settlement charges, and the directors picked up the tab.
The order relates to Sebi`s investigation about Anil Ambani group companies investing funds raised through external commercial borrowing (ECB) and foreign currency convertible bonds (FCCB) in the domestic stock market, which is not allowed under current rules.
The investigations showed that R-Infra and RNRL were prima facie responsible for misrepresenting the nature of investments in `Yield Management Certificates/Deposits` and the profits and losses from its annual reports for three financial years — 2006-07, 2007-08 and 2008-09.
The Sebi investigation also found that these companies had misused FII regulations.
Based on the findings, Sebi issued a showcause notice in June 2010. In early September, the companies and the executives, including Ambani, approached Sebi for a settlement in line with the applicable provisions that resulted in Sebi levying a penalty of Rs 25 crore each for the two companies and deciding on the ban.
In addition, Sebi has asked for rotation of auditors of the two companies. According to information available with the Bombay Stock Exchange, PriceWaterhouse and Chaturvedi & Shah were the statutory auditors for R-Infra for financial years 2007-2008 to 2009-10. For the current financial year, Haribhakti & Co has been appointed the statutory auditors.
In addition, a penalty of Rs 50 crore was imposed on the companies, the executives and Ambani. The executives include Satish Seth, S C Gupta, J P Chalasani and Lalit Jalan, Sebi said in an order posted on its website.
The regulator said the companies and the executives paid the penalty "without admitting or denying the charges".
An R-Infra spokesperson said the Sebi order did not bar the companies from raising money from the market through equity or equity-linked instruments, but these companies could not invest in stocks of other companies. Also because RNRL has since been merged with R-Power, the spokesperson said, R-Power will not be covered by the order. In its order, Sebi said the consent terms would apply to "surviving corporate entities should any of the corporate applicants (RNRL or R-Infra) undergo any change on account of merger, amalgamation or restructuring or any other similar corporate action".
The R-Infra spokesperson said the companies had voluntarily settled the matter with the regulator, with no admission or denial of guilt. The "settlement (was) made in (the) interests of investors to pre-empt unnecessary and time-consuming litigation", the spokesperson said.
On payment of the penalty, the R-Infra spokesperson said the directors had already paid the Rs 50 crore settlement charge, and "the settlement with Sebi was arrived at no cost to the companies". This means the two companies, R-Infra and R-Power, did not have to pay the settlement charges, and the directors picked up the tab.
The order relates to Sebi`s investigation about Anil Ambani group companies investing funds raised through external commercial borrowing (ECB) and foreign currency convertible bonds (FCCB) in the domestic stock market, which is not allowed under current rules.
The investigations showed that R-Infra and RNRL were prima facie responsible for misrepresenting the nature of investments in `Yield Management Certificates/Deposits` and the profits and losses from its annual reports for three financial years — 2006-07, 2007-08 and 2008-09.
The Sebi investigation also found that these companies had misused FII regulations.
Based on the findings, Sebi issued a showcause notice in June 2010. In early September, the companies and the executives, including Ambani, approached Sebi for a settlement in line with the applicable provisions that resulted in Sebi levying a penalty of Rs 25 crore each for the two companies and deciding on the ban.
In addition, Sebi has asked for rotation of auditors of the two companies. According to information available with the Bombay Stock Exchange, PriceWaterhouse and Chaturvedi & Shah were the statutory auditors for R-Infra for financial years 2007-2008 to 2009-10. For the current financial year, Haribhakti & Co has been appointed the statutory auditors.
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