Sebi freezes shares of Accel Frontline for violating MPS norms

The promoter and promoter group share holders had 75.29 per cent equity shares on March 31, 2015, alleged Sebi

The Securities and Exchange Board of India (Sebi) has freezed shares of the promoters and the promoter group share holders of Accel Frontline Ltd related to alleged non-compliance with the Minimum Public Shareholding (MPS) norms. The market regulator, which sought to consider the order as a show cause notice to the company against further action, has barred promoters from buying or selling of shares in the market till the company complies with the MPS norms.

The order, issued by Prashant Saran, whole time member of Sebi, said that as on March 31, 2015, the public shareholding in the company was at 24.71 per cent, while the MPS should be 25 per cent under a section of the Securities Contracts (Regulation) Act, 1956 (SCRA) and other rules.

 

The order stated, "direct freezing of voting rights and corporate benefits like dividend, rights, bonus shares, split, etc. with respect to the excess of proportionate promoter/ promoter group shareholding (including persons allegedly shown as public shareholders) in the Company, till such time the Company complies with the minimum public shareholding requirement."

The market watchdog calculated that the excess promoter/promoter group holding of 60 per cent shall be frozen till the minimum public shareholding requirement is complied with. The excess shareholding of the promoters (including persons allegedly shown as public shareholders) of the Company that should be frozen is 1.16 per cent.

 

It also prohibited the promoters or promoter group and the directors of the Company from buying, selling or otherwise dealing in securities of Company, either directly or indirectly, in any manner, except for the purpose of complying with minimum public shareholding requirement till such time the Company complies with the minimum public shareholding requirement.

Further, Sebi restrained the shareholders forming part of the promoter/promoter group from holding any new position as a director in any listed company, till such time the Company complies with the minimum public shareholding requirement, according to the order. The SCRA was enacted to prevent undesirable transactions in securities by regulating the business of dealings therein.

 

The order is without prejudice to the right of Sebi to take any other action including levying monetary penalty under adjudication proceedings, initiating criminal proceedings, moving the scrip to trade-to-trade segment and excluding the scrip from the F&O segment, among others, and sought the company to show cause as to why such proposed action should not be initiated against them.

The company's shareholding pattern changed after in December 2013, one of the Company's promoters, CAC Corporation, Japan, had acquired a majority stake in the Company, which triggered an open offer. Following the completion of the open offer on March 3, 2014, the total promoters' shareholding increased to 89.02 per cent with public shareholding at 10.98 per cent. Following three offer for sale (OFS) following which the promoter group shareholding was 75.29 per cent.

"Though, it is seen that the public shareholding in the Company is less than the minimum stipulated level of 25 per cent by only 0.29 per cent, it is to be noted that the Company is non-compliant with the MPS norms," said the order. While the company requested Sebi to extend time to the promoter group to comply with the regulation by selling 87,574 equity shares in the open market, it was made after the due date for compliance of March 2, 2015.