The Securities and Appellate Tribunal (SAT), while accepting the agreement between the Securities and Exchange Board of India (Sebi) and Vaswani Industries, has directed the company to complete the process within 60 days.
According to the agreement, the company will provide a withdrawal option to retail investors up to a maximum of 1.5 million shares. Further, the company will also come out with a bonus issue in the ratio of 1:4, post the withdrawal option, in which the promoters will not participate. The company will first list its shares and complete the necessary formalities for the proposed bonus issue. Trading in those shares, however, will be permitted only after the allotment of bonus shares to its shareholders are completed.
The issue came before SAT after the regulator, on July 11, ordered Vaswani Industries to give a withdrawal option to all retail and high net worth investors (HNIs) who had subscribed to the company’s IPO, alleging widespread manipulation during the issue’s book building process.
The tribunal, however, clarified that “the ongoing investigation carried out shall not be affected in any manner” and that Sebi was free to take any action as it deemed fit against any person who it believed was guilty of violating the regulatory framework.
The case goes back to May, when the IPO of Vaswani closed for subscription. On
May 3, when the issue closed, the stock exchange website showed the offer was subscribed 4.16 times, with the institutional segment being subscribed 0.16 times. The portions reserved for high networth individuals and retail investors were subscribed 11.29 times and 6.82 times, respectively.
Sebi investigations, however, showed the issue was subscribed only 1.28 times post the withdrawals. The subscription in the HNI category dropped to 0.84 times from the earlier 11.29 times.
