Sebi Calls Meeting Of Rcs Clients Today

The clients essentially are Reliance group companies, Reliance Industries, Reliance Capital and other group outfits.

The meeting is crucial in that the alternate steps would affect a huge body of shareholders, estimated at over ten million for the Reliance group as a whole.

The final hearing of RCS officials before the Sebi chairman D R Mehta is over, and a judgement on the fate of the registrar outfit is awaited.

The decision would have to be taken by Mehta himself. However, the decision is unlikely to be an easy one given the sheer number of shareholders it affects. However, the meeting is indicative of one thing: action against RCS is certain.

 

Already, Reliance has started a complete audit of its shareholder database, with the help of Arthur Anderson and Associates, as a sign that it is serious about cleaning up the mess at the RCS end. The Sebi inspection report on RCS had made some extremely hard-hitting observations about the systemic deficiencies at the registrar's end.

Today's Sebi meeting would focus on what are the kinds of alternative arrangements which can be made for the Reliance group shareholders as far as share registration work is concerned.

The only options Sebi has before it for RCS are either to suspend the outfit for a fixed period, or close it down altogether by cancelling its licence. In either of the cases, arrangements must be made so that there is minimum dislocation and discomfort for the shareholders of the Reliance group.

At this point, there is no clear indication about which way Mehta would go in deciding on RCS' fate.

Today's meeting would go a long way in determining the extent to which the problem of shareholder servicing can be tackled.

Sebi officials are clear, however, that any decision on RCS would have to be taken keeping in mind the fact that innocent shareholders of the group companies cannot be punished for lapses at RCS's end.

The Sebi inquiry officer's report which constituted the basis of the show cause sent by the regulator to RCS threatening cancellation of its licence has made a number of points which were discussed threadbare at the final hearing Mehta had with the RCS top brass.

Several points pertain to suspension of licence, while some pertain to cancellation, sources said. RCS is understood to have submitted to Mehta that the lapses were not mala fide and were not committed with any ulterior motives.

Reliance has already announced a complete restructuring of its registrar and transfer agent facilities.