The Security and Exchange Board of India has disposed of the Rs 3 lakh penalty it had earlier imposed on Viaan Industries Ltd along with its owners and promoters actor Shilpa Shetty and her husband Raj Kundra after finding that there was no violation of shares acquisition regulations.
The SEBI had earlier conducted an investigation into the trading of Viaan Industries Ltd from September 2013 to December 2015, during which it was found that Kundra, Shetty and their company had violated the insider trading prohibition.
In October 2015, the company had made a preferential allotment of 5,00,000 equity shares to four persons, of which 1,28,800 shares each (valued at Rs 2.57 crore) were allotted to the promoters Kundra and Shetty. According to the SEBI’s Prohibition of Insider Trading regulations, if the transactions exceeded Rs 10 lakh, the promoters are required to disclose this to the company within two trading days, from the day of acquiring the shares.
However, Shetty and Kundra had only made the disclosures via email in May 2019, after a delay of more than three years. Though they had claimed their delay in disclosure was “only due to inadvertence with no malafide intention,” the SEBI had imposed a Rs 3 lakh fine.
Following this, an adjudicating officer was appointed in the case to examine whether the duo had violated SAST (Substantial Acquisition of Shares and Takeover) Regulations and whether the violation committed by them would attract monetary penalty and if so, what that penalty should be.
In an order dated July 30, the adjudicating officer noted that “the change in the shareholding of the noticees (Shetty and Kundra) after the preferential allotment was well within the threshold limit prescribed under the provisions of the SAST Regulations.” Therefore, no disclosures needed to be made by them and they had thus not violated the provisions of the SAST Regulations, he added.
According to the SAST Regulations, as explained in the order, any shareholders entitled to 5% or more of the shares or voting rights in a target company must make a disclosure if there is a change in shareholding exceeding 2% of the total shareholding or voting rights in the target company. In Shetty and Kundra’s case, however, the change was only 0.02% and did not require any disclosure.
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This development comes amidst the ongoing probe into a pornography racket in which Kundra was arrested as the “key conspirator” earlier this month. On Monday, the Bombay High Court reserved its judgment against the plea filed by Kundra challenging his arrest and the subsequent orders in the case. The court also remanded him to custody for an additional 14 days.
Besides Kundra, 11 others have been booked in the case so far. In a new development in the case, the Bombay High Court on Tuesday rejected interim relief to actor Gehana Vasishth in her anticipatory bail plea.