Sebi revokes imposed restrictions on two companies

NB Footwear, Transformers & Rectifiers have complied with MPS norms: Sebi

Sebi today revoked the restrictions it had imposed on two companies, its directors and promoters for not meeting the minimum public shareholding norms, as they have now complied with the requirements.

In two separate orders, Securities and Exchange Board of India (Sebi) said it is revoking the directions against NB Footwear and Transformers & Rectifiers, and their directors and promoters "with immediate effect".

Sebi said it did not propose to initiate further action against the companies as they have "complied with the MPS (Minimum Public Shareholding) norms, though belatedly".

In an June 4 order, Sebi had imposed various restrictions on 105 companies including Transformers & Rectifiers and NB Footwear, their promoters and directors for not achieving the minimum 25% public holding within the June 3 deadline.

The regulator had frozen the voting rights and corporate benefits of promoters/directors of these companies and barred them from holding any new position on boards of listed firms, among others.

It had also warned of further actions including levy of monetary penalties, initiation of criminal proceedings and restricting the trading activities of related stocks.

In its submissions to Sebi, Transformers & Rectifiers said it had undertaken a bonus issue wherein it had allotted 3.32 lakh shares to its public stakeholders on June 18, 2013 for the purposes of complying with the norms.

"The public shareholders now hold 25.10% in the company," Sebi said.

In the matter related to NB Footwear, the firm said it was allowed to increase the authorised share capital from Rs 5 crore to Rs 20 crore and to convert the unsecured loan of Rs 9 crore received from the promoters into equity share capital.

Accordingly, the firm had allotted 90 lakh shares on September 17, 2010 to the promoter group on preferential basis subject to lock-in period of three years which resulted in the increase of their holding to beyond 75%.

However, the market regulator noted that both the firms had delayed in compliance with the minimum public shareholding requirement.

"Therefore, the company is warned for its conduct and is advised to ensure compliance with all the applicable laws and regulations administered by Sebi, in letter and spirit," Sebi said in both the orders.