Reliance Industries gets SAT relief for second time in fortnight

Tribunal sets aside Sebi order against RIL for inadequate disclosure

The Securities Appellate Tribunal (SAT) on Wednesday granted a second relief to Reliance Industries (RIL) this fortnight. It set aside a Securities and Exchange Board of India (Sebi) order penalising the company for Rs 13 crore.

That 2014 order was on allegedly inadequate disclosures. Sebi held the company had violated the Listing Agreement with regard to disclosure and computation of a key earnings ratio.

About 10 days earlier, SAT had granted relief to another Reliance group company, Reliance Petroinvestments, in a matter pertaining to alleged insider trading. SAT decided Sebi hadn’t taken all submissions into consideration, set aside the Rs 11 crore penalty imposed by the latter and told it to re-examine the case.

The RIL disclosure case was on a probe by the capital markets regulator in a seven-year-old matter, involving alleged irregularities in issuance of 120 million warrants to its promoters which could result in holders subscribing to an equivalent number of equity shares of RIL. Sebi’s order in 2104 had alleged this issuance in April 2007 had resulted in diluting the pre-issue paid-up equity share capital of RIL but the company repeatedly failed to disclose a key earnings ratio for as many as six quarters.

Thus, Sebi held the company breached the listing agreement and the Securities (Contract and Regulations) Act.

One of the grounds of appeal was that the Sebi order took into account all 120 mn shares relatable to the warrants in computing the diluted earnings per share for the six quarters in question. “In view of the language of Accounting Standard (AS) 20, this does not appear to be correct. We, therefore, set aside the impugned order and remand the matter,” SAT said.