Sebi imposes Rs 1-cr fine on Golden Tobacco's directors

Sebi has imposed a collective fine of Rs 1 crore on Golden Tobacco's Chairman, vice-chairman and six others for violating 'Substantial Acquisition of Shares and Takeovers (SAST)' regulations, back in 2009.
In an order today, Sebi found that in 2009 eight directors on board of Golden Tobacco had entered into a MoU with Sheth Developers and Suraksha Realty during the period of open offer with respect to the development of its property without obtaining proper approvals from the general body. This was against the rules prescribed under SAST norms.
Accordingly, Sebi has imposed "a penalty of Rs 1 crore to be paid jointly and severally by Sanjay Dalmia, Anurag Dalmia, Jyoti Prakash Khetan, Raghunath Kumar, Bharat Merchant Bachubai, Ashok Kumar Joshi, Rishabh Jain and Vijay Kumar Bhandari...Of the Sebi Act," the regulator said in the order.

However, the capital market watchdog has disposed of the charges against Anish Babu Venugopal, a nominee director of Golden Tobacco, on grounds that he "was not even present and did not hold the position of a 'Nominee Director' at the time of the main board meeting held on September 24, 2008 and the shareholders meeting".
The case relates to a Sebi probe into the alleged irregularities in the shares of Golden Tobacco and into other the possible violation of regulatory norms.
The investigation revealed that Golden Tobacco was in the process of certain developmental activities of the real estate property from March 2007.

On June 8, 2009, the company had appointed E&Y with respect to the development of the property which shortlisted Sheth Developers and Suraksha Realty for the project.

Subsequently, on November 12, 2009, one Pramod Jain came out with a public announcement to acquire shares of Golden Tobacco.
However, it found that Golden Tobacco had entered into and signed a Memorandum of Undertaking (MoU) with Sheth Developers and Suraksha Realty during the open offer period without the approval of the general body of shareholders.
As per the norms, unless the approval of the general body of shareholders is obtained after the date of the public announcement of offer, the board of directors of the target company cannot, during the offer period, enter into an agreement for sale, transfer, encumbrance or dispose assets.