Sebi fines Circuit Systems’ Vasani Rs 50K

Sebi has imposed a penalty of Rs 50,000 on Paresh N Vasani,a promoter of Circuit Systems India,for failing to make an open offer to shareholders even after his stake in the company going beyond 15%. The market regulator has said that Vasani violated rules by not making a public announcement to acquire the company’s shares despite his stake crossed the threshold limit of 15%. In an order dated August 23,the Securities and Exchange Board of India (Sebi) said after taking into consideration all the facts and circumstances of the case,it was imposing Rs 50,000 fine on Vasani. As per norms,any entity that acquires more than 15% stake in a company has to make an open offer to existing shareholders. “Since the noticee failed to make a public announcement in newspapers within the time stipulated in the regulation,to this extent it can be said that the noticee earned disproportionate gain or unfair advantage,” the order said. Vasani’s delay in making the public announcement has also resulted in denying the statutory right of shareholders to exit through open offer mechanism at the respective point of time. “To this extent,there was loss to the investors,” it added. Vasani had filed an application,for making an offer for shareholders,with the regulator on October 25,2011. This was to acquire 31.4000000 shares of Circuit Systems at Rs 10 a piece. However,Sebi found that the company had allotted 2000000 shares on preferential basis to Vasani on March 31,2010,thereby taking his stake to 12.74%. Prior to this allotment,Vasani was holding 6.4800000 shares of the firm. So,Vasani’s overall shareholding was at 16.87% — beyond the prescribed 15% limit — when he made the request for open offer with Sebi. “... the noticee was under obligation to make an open offer which was to be made within four working days from the date of acquisition... within April 6,2010 which the Noticee did not comply with,” the order said. In view of this violation,Sebi had asked Vasani to revise the final offer price to Rs 16 from Rs 14.75 per share for the offer.