A promoter group entity of Financial Technologies (FTIL) has skipped the disclosure of its shareholdings to the stock exchanges, as required under regulations. Sigma Financial Services, an entity in which Jignesh Shah's private firm La-Fin Financial Services owned 18 per cent till March 2013, owned 7,000 shares of FTIL at Rs 45.2 a piece. However, Sigma's shareholding did not figure in the shareholding pattern of FTIL filed with the exchanges in March 2013 or before.
These holdings were revealed on a Business Standard analysis of Sigma's filings with the ministry of corporate affairs (MCA). While Jignesh Shah holds 10 per cent stake in FTIL, La-Fin, owned by Shah and his wife, holds 26.76 per cent and both are listed as promoter group shareholders. By virtue of these holdings, Sigma qualifies as a promoter group shareholder.
According to the provisions of Issue of Capital and Disclosure requirements regulations, 2009, in cases where an individual is a promoter, the term 'promoter group' includes: "(A) any body corporate in which 10 per cent or more of the equity share capital is held by the promoter or an immediate relative of the promoter or a firm or Hindu Undivided Family in which the promoter or any one or more of his immediate relative is a member; (B) any body corporate in which a body corporate as provided in (A) above holds 10 per cent or more, of the equity share capital".
Securities law experts said Sigma Financial falls under Clause B of this definition and is liable to comply with all obligations and disclosure requirements that come with it. "A promoter group entity has continuous and periodical disclosure obligations of holdings and actions under the insider trading regulations, listing agreement and takeover regulations. Non-disclosure would attract action under any or all of these," said a senior compliance professional.
A Delhi-based corporate lawyer said, "This would amount to failure to disclose true and fair picture to the shareholders." Both declined to be named since they are not allowed to comment on company-specific stories.
When contacted, an FTIL spokesperson did not deny the shareholding. "Sigma Financial Services Pvt Ltd has not carried out a single transaction of trading in shares of FTIL except a transaction of 100 shares in the last six years. La-Fin Financial Services Pvt Ltd had invested in the equity capital of the company in FY 2001-02 and 2002-03 and did not have any substantial shareholding, management representation, management control or seat on the board of directors of the company. No amount of dividend was received from the company. No direct or indirect benefit was received by La-Fin," the FTIL spokesperson said in response to Business Standard's queries on the company's shareholding and investments.
Sigma's non-disclosure assumes significance as the Special Audit Report by PricewaterhouseCoopers (PwC) identifies it as one of the entities which appeared in the unique client code (UCC) database of MCX. The report pointed out that while the UCC mentioned the name of the firm as Sigma Investments, the PAN number given belonged to Sigma Financial Services.
According to the latest balance sheet of Sigma, the 12,000 shares of La-Fin Financial have been transferred to one Amishi Shah in FY14, when the National Spot Exchange (NSEL) payment crisis broke out. Amishi is the daughter of Mukesh Shah, the auditor of NSEL and a relative of Jignesh Shah, the PwC report stated citing various sources. The filings of Sigma also showed La Fin, Mukesh Shah's family members and Sigma Financial all shared the same address of "Damodar Niwas, 32-34, C P Tank Road, Mumbai."
"Mukesh Shah was neither an auditor nor on the board of the company Sigma Financial Services Pvt Ltd. Mukesh Shah is in full compliance, as per Company Law, to be the auditor of some of our group companies," the spokesperson added.
Although in the books of Sigma Financial, the FTIL shares are valued conservatively at Rs 3.17 lakh at Rs 45.2 a piece, the shares had hit a high of over Rs 3,000 in 2007. At those high prices, the holding would have been worth a couple of crores of rupees. At Friday's closing price of Rs 203 a share, these holdings were worth a little over Rs 14 lakh.