Hubtown settles minimum public shareholding case with Sebi

Markets regulator Sebi today settled adjudication proceedings against Hubtown Ltd and its promoters with regard to violation of (MPS) norms on payment of Rs 12.85 lakh as settlement charges.
Sebi found that the company and its promoters did not comply with the minimum public share holding regulations of 25 per cent within the mandated timeframe.
The regulator, in June 2010, had asked listed companies to comply with this requirement in three years. "In the extant case, a concrete step towards compliance was taken only during June 2014," Sebi said in its order.
After noticing contraventions, the regulator started adjudicating proceeding against the company and its 13 promoters, including Hemant M Shah, Vyomesh M Shah, Kunjal H Shah, Falguni V Shah and Rushank V Shah, in April last year.

Sebi said that pending adjudication, the entities proposed to pay the settlement amount in terms of the Settlement Regulations and submitted settlement terms of Rs 12.85 lakh.
The case was then placed before the High-powered Advisory Committee (HPAC).

"After considering the facts and circumstances of the case, HPAC recommended that the case may be settled on payment of Rs 12,85,625...," Sebi said.
"The hedge limit to be granted by the exchanges to the
bona fide hedgers shall be in addition to the normal position limit allowed to it. Such hedge limit is non-transferrable and shall be utilized only by the hedger to whom the limit has been granted and not by anyone else," markets watchdog said.

This hedge limit granted for a commodity derivative would not be available for the near month contracts of the said commodity from the date of applicability of near month limit.
Hedge limits for a commodity would be determined on a case to case basis, depending on applicant's hedging requirement in underlying physical market based upon his/its export or import commitments held, past track record of production or purchase or sales/ processing capacity and other factors as the exchanges may deem appropriate.
Sebi said exchanges would have to undertake proper due diligence by verifying documentary evidence of the underlying exposure and ensuring that the hedge limit granted is genuine and does not have the potential to disturb the equilibrium of the market of that particular derivative contracts.

The hedge limit may also be made available in respect of the short open position acquired by an entity for the purpose of hedging against the stocks of commodities owned by it.
Besides, it is applicable in pledging done with the scheduled commercial bank, co-operative banks among others.
At any point of time during the hedge period, hedging positions taken in derivatives contracts by hedger, across multiple exchanges/contracts, would not exceed its actual or anticipated exposure in the physical market, even if there is a usable hedge limit available as per allocation made by the exchanges to the hedger.
Under any circumstances a hedger is found availing hedge limit in contrary to the guideline framed by Sebi or exchanges or submits false document or fails to inform the bourse timely about reduction of underlying exposure, the regulator said it would be liable for expulsion from membership or prohibition from trading as the case may be.

Such action would be without prejudice to other disciplinary actions including penalties prescribed by exchanges.
A hedger having availed of benefit of hedge limits, would have to preserve relevant records for a period of minimum three years for inspection by Sebi/exchange.
The hedge limit approved by an exchange would be valid for a period as mentioned in the approval letter and such hedge limit would stand cancelled automatically upon expiry of such period without any notice.
The exchanges would have to disclose on their website the hedge position allocated to various hedgers, indicating the period for which approval is valid, in an anonymous manner.