Sebi rectifies penalty on Samir Jain, wife and others in PNB Finance case

The Securities and Exchange Board of India (Sebi) has rectified the penalty imposed on Samir Jain, vice chairman and managing director of Bennett, Coleman & Co (BCCL), wife Meera Jain and four others to Rs 20 lakh from Rs 1 crore in a matter pertaining to violation of minimum public shareholding (MPS) norms in PNB Finance and Industries (PNBFIL).

“…it has been brought to the notice that, while the penalty amount has been mentioned correctly in figures, there has been an error in the penalty amount being mentioned in words,” said Sebi in a corrigendum to its earlier order.

Emails sent to Jain or BCCL didn’t elicit a response till the time this story was published.

The markets regulator, in an order dated March 28, restrained the couple and two others from accessing the capital market and also barred them from holding any key managerial positions at a listed company till the compliance of MPS norms.

On the same date, Sebi passed another order in the case of Camac Commercial Company (CCCL) for similar violations.

Sebi’s action was due to alleged violation of MPS and wrong disclosures of promoter shareholdings by PNBFIL and CCCL, firms listed on the Calcutta Stock Exchange and holding stakes in BCCL.

In the CCCL matter, Sebi imposed a penalty of Rs 1.41 crore each on Samir and Meera. It imposed a market ban on Jain, except for the purpose of complying with MPS requirements. The couple was restrained from holding key positions at listed companies, till such time CCCL complies with the MPS requirements.

BCCL is the flagship company of the Times Group, which owns prominent media brands such as the newspapers 'Times of India', 'Economic Times', radio channel Radio Mirchi and TV news channel Times Now.

A Sebi investigation allegedly found a group of 19 entities, which were connected with one another through a complex web of network and associations, were holding majority shares in both PNBFIL and CCCL beyond the permissible 75 per cent.

Sebi found connected entities holding 91.51 per cent and 94.45 per cent in PNBFIL and CCCL, respectively. Under the listing regulations, a promoter can hold a maximum of 75 per cent in a listed company.

“Investigation into the affairs of PNBFIL showed that 8 of these 19 entities were controlling the affairs of PNBFIL without disclosing themselves as promoters of the company or person in control of the affairs and management of the company,” the Sebi order said.

As per Sebi’s order, Samir and Meera held 16.25 per cent and 6.13 per cent stake in PNBFIL. In October 2020, Sebi issued show cause notices to Jain and others.

Sebi alleged that PNBFIL and CCCL’s shareholding was structured in manner “to camouflage the actual shareholding of Jain Family.”

“Due to their non-compliance with MPS Requirement, and holding of control over shares as well as voting rights of as much as 91.51 per cent of total shareholding as well as voting rights in the company, practically no floating shares for trading and no liquidity, whatsoever, was available in the market... Due to this, the public investors were deprived of their right of price discovery of the shares of the company,” said Sebi in its order.

“As the non-compliance of MPS Requirement had continued for a long period of six financial years, at no point of time any actual price discovery of shares of the company could take place on the stock exchange platform,” said the order.

The regulator also pulled up the company for making wrong disclosures around their promoter shareholding.

“It has also been established that the company has repeatedly disclosed a patently false shareholding pattern thereby showing zero promoters’ shareholding and in essence, was disclosing that it does not have any promoter entity in the company. By making such false disclosures on six occasions in annual disclosures made after ending of financial years 2013-14 to 2018-19, the company has violated the provisions of SAST (Substantial Acquisition of Shares and Takeovers) Regulations, which require annual disclosure by a listed company of its promoters’ shareholding at the end of every financial year in prescribed format,” it said.