Sayaji Hotels fined Rs 12 lakh in public holding norms case

Market watchdog Sebi has imposed a penalty of Rs 12 lakh on Sayaji Hotels for not complying with 25 per cent minimum public shareholding (MPS) norms within the stipulated time.
"There has been a delay of 17 months in complying with the MPS norms by the noticee (Sayaji Hotels) after the stipulated 12 months available for compliance," Securities and Exchange Board of India (Sebi) said in an order.
According to the regulator, public shareholding in Sayaji Hotels dropped to 20.10 per cent on October 3, 2013 and it was required to increase the stake to 25 per cent within a period of one year till October 2, 2014.

However, the firm complied with the norms only on March 3, 2016 by selling excess promoter holding through the OFSs (offer-for-Sale) carried out in February and March, 2016.
The company also admitted that there has been delay in complying with the norms. However, the firm cited poor market conditions, losses incurred by it in 2014-15, bad dividend history and probable disinterest of existing shareholders as the reasons for not diluting promoters' shareholding.
"In my opinion, no responsible person (noticee) shall evade obligation of compliance on probable grounds of possibility of failure in proposed attempts of compliance. Several options and a time of 12 months were available to the noticee and it could have exercised any if the options within the stipulated time, but it failed to do so," Sebi Adjudicating Officer Sangeeta Reddy said.

"If the noticee would have exercised any of the available options under ... Listing Agreement and the same would have failed, then it could be said that the noticee has made an attempt to dilute the promoters' shareholding - tried to comply with the MPS norms," she added.

Earlier, Sebi had passed an interim order on June 4, 2013 against 105 listed companies including Sayaji Hotels, which did not comply with the MPS norms within the due date, that is June 3, 2013. It had imposed several restrictions on these firms.
Thereafter, Sebi in its final order in May 2017 revoked the directions issued against Sayaji Hotels and its promoters after it complied with the norms. However, the case was referred for adjudication proceedings because of delayed compliance with the MPS norms.

Accordingly, the regulator, in its order passed on September 29, levied a fine Rs 12 lakh on the company for violating norms under Securities Contracts (Regulation) Rules or SCRR.