Shares of Morepen Laboratories were locked in the lower circuit band of 20 per cent at Rs 17.40 on the BSE on Wednesday after market regulator Securities Exchange Board of India (Sebi) prohibited the company from accessing the capital market and restrained it from dealing in securities, including units of mutual funds, for a period of one year.
The trading volumes jumped more than three-fold, with only sellers being seen on the counter, with a combined 5 million shares changing hands on the BSE and NSE. At 02:40 pm, there were a combined pending sell orders for 301,974 shares on both the exchanges.
“Sebi, in the matter of issuance of Global Depository Receipts (GDRs) by the company, the regulator has directed, inter-alia, prohibition on securities market's access and restraining from buying, selling or otherwise dealing in the securities, either directly or indirectly or in any other manner whatsoever, for a period of one year,” Morepen Labs said in a regulatory filing on Tuesday after market hours.
In a clarification issued today, the company said that the matter was pertaining to the year 2003 which has been finally settled by the Sebi. Further, there was no impact on the existing securities listed with the Stock Exchanges as well as no financial implications on the business operation of the company.
"Additionally, with reference to the ongoing preferential issue of fully convertible warrants (to be converted within 18 months), the company is seeking guidance regarding implication of the Sebi's order and the process to be followed to complete the said preferential issue of warrants," it added.
Last week, the board of Morepen Labs approved the allotment of 37 million of warrants for an aggregate amount of up to Rs 74 crore, convertible into 37 million equity shares. Each warrant is convertible into one equity share and the conversion can be exercised at any time during the period of 18 months from the date of allotment of warrants.