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WTM/PS/40/CFD/OCT/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA
CORAM : PRASHANT SARAN, WHOLE TIME MEMBER

ORDER
Under Section 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India Act,
1992 read with Section 12A of the Securities Contracts (Regulation) Act, 1956 in the matter of
non-compliance with the requirement of minimum public shareholding by listed companies

In respect of Tulive Developers Limited

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') passed an interim order
dated June 04, 2013 (hereinafter referred to as 'the interim order') with respect to 105 listed
companies who did not comply with the Minimum Public Shareholding ('MPS') norms as
stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957
(hereinafter referred to as 'SCRR') within the due date i.e., June 03, 2013. The interim order was
passed without prejudice to the right of SEBI to take any other action, against the non-compliant
companies, their promoters and/ or directors or issuing such directions in accordance with law.
The interim order was to be treated as a show cause notice by those companies for action
contemplated in paragraph 18 thereof.

2. Tulive Developers Limited (hereinafter referred to as 'the Company') is one such company
against whom the interim order was passed. The shares of the Company are listed on the Bombay
Stock Exchange Limited ('BSE').

3. The Company vide its letter dated February 21, 2014 and email dated June 02, 2014, filed its reply
to the interim order. Thereafter, an opportunity of personal hearing was afforded to the Company
on June 27, 2014. However, the representative of the Company failed to turn up for the personal
hearing. The representative of the Company vide his email dated July 01, 2014, submitted that he
could not reach for the personal hearing due to certain misunderstanding at his end regarding the
venue. In the interest of justice, one more opportunity of personal hearing was granted to the
Company on July 21, 2014, when Mr. Narendra Joshi, Advisor to the Company appeared and
made submissions. The Company during the course of personal hearing was asked to submit the
details with respect to the increase in the number of its shareholders pursuant to the sale of
shares in market along with the individual shareholding. The Company vide its letter dated July
31, 2014, submitted the details regarding the number of shareholders prior to divestment and
post divestment.
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4. The submissions of the Company are as under:
a. The Company, had received disclosures under the SEBI (Substantial Acquisition of Shares and
Takeover) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 1992 from
one of its Promoter and Director, Mr. Atul Gupta, intimating therein the sale of 1,03,500 shares
representing 2.97% of the paid up share capital of the Company on June 03, 2013 in open
market.
b. The above sale has resulted in the increase of the public shareholding in the Company to 25.01%
as on June 03, 2013.
c. The Company believed that the minimum threshold for the Offer for Sale (OFS) is 25 Crore
and such threshold should be achieved either at 1% or 10% or such lesser percentage so as to
achieve MPS. As it was not achieving the 25 Crore threshold, it bonafidely thought that it could
not avail the OFS mode and had sold the equity shares in the secondary market.
d. The Company also requested SEBI to consider its case for post facto approval.
e. Prior to the disinvestment, the Company had 177 shareholders.

5. I have considered the reply of the Company and the submissions made during the personal
hearing. The company has submitted that it had complied with the MPS requirements within the
stipulated period. According to the Company, it misread the provisions of the OFS and thought
that it could not do OFS as it was not able to achieve the 25 crore threshold. I note that the
promoters of the Company had sold 1,03,500 equity shares representing 2.97% of the paid up
share capital of the Company on June 03, 2013 in open market on the floor of the exchange to
one Ms. Rajshri Choudhary. As per the shareholding pattern for the quarter ended September
2013, the name Mr. Rajshri Choudhary is mentioned as one of the public shareholder, holding
2.97%. The Company has submitted that she is neither a promoter nor a director of the
Company. Pursuant to the same, the promoters' holding was reduced to 74.99%.

BSE also vide its email dated June 02, 2014, has confirmed to SEBI that the counterparty to the
sale of 1,03,500 shares (representing 2.97% of the paid up share capital of the Company) on June
03, 2013 was only Ms. Rajshri Choudhary, who is neither a promoter nor a director of the
Company.

6. I note that SEBI had issued circulars dated December 16, 2010, February 08, 2012 and August
29, 2012, in order to align the requirements in the Listing Agreement to specify the manner in
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which public shareholding may be raised to the prescribed minimum level. These circulars inter
alia provided the following methods for complying with the MPS requirements:
a. Issuance of shares to the public through prospectus,
b. Offer for sale of shares held by promoters to public through prospectus,
c. Sale of shares held by promoters through the secondary market i.e. OFS through Stock
Exchange,
d. Institutional Placement Programme,
e. Rights Issues to public shareholders, with promoters/ promoter group shareholders forgoing
their rights entitlement,
f. Bonus Issues to public shareholders, with promoters/ promoter group shareholders forgoing
their bonus entitlement,
g. Any other method as may be approved by SEBI, on a case to case basis.

7. The sale of 2.97% of the paid up share capital in the open market by the promoter is not a
prescribed mode of compliance by the Company, in terms of the above referred circulars. Nor
has the Company sought specific prior permissions from SEBI for this sale in the open market. It
is also noteworthy that several companies had approached SEBI at an early stage, with a request
to permit them for open market sale so as to achieve compliance of MPS requirements and SEBI
had granted permissions to many such companies.

8. I am not convinced with the reasons submitted by the Company for not adopting methods
mentioned in the circulars for bringing the shareholding of the public shareholders in the
Company at the stipulated minimum level of 25%. Considering the facts and circumstances of
the case, it is quite clear that the Company had the primary responsibility to comply with the
MPS requirement by adopting the methods available to it as discussed in paragraph 6 above. In
case the Company was experiencing any difficulty it should have approached SEBI with its
proposed method for approval, which the Company has clearly failed to do. In view of the
deviation noted above, I am of the considered view that the case be referred for adjudication
proceedings under Sections 23E and 23H of the Securities Contracts (Regulation) Act, 1956 read
with the Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing
Penalties By Adjudicating Officer) Rules, 2005.

9. Accordingly, I, in exercise of the powers conferred upon me under Section 19 of the Securities
and Exchange Board of India Act, 1992 read with Sections 11(1), 11(2)(j), 11(4) and 11B thereof
and Section 12A of the Securities Contracts (Regulation) Act, 1956, hereby revoke the directions
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issued vide the interim order dated June 04, 2013 against the company, Tulive Developers Limited,
its directors, promoters and promoter group, with immediate effect. The matter is referred for
adjudication proceedings for adjudicating under Sections 23E and 23H of the Securities
Contracts (Regulation) Act, 1956. For this purpose, an adjudicating officer shall be appointed by
SEBI in terms of Section 23I of the Securities Contracts (Regulation) Act, 1956 read with the
Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties By
Adjudicating Officer) Rules, 2005 and such adjudicating officer shall conduct the inquiry in
accordance with law.

10. Copy of this Order shall be served on recognised stock exchanges and depositories for their
information and necessary action.




DATE: October 22
nd
, 2014 PRASHANT SARAN
PLACE: Mumbai WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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