Sebi asks individual to disgorge Rs 4.9 crore for flouting takeover norms in Orient Tradelink case

Markets regulator Sebi has asked an individual to disgorge Rs 4.9 crore latest by January 31 for failing to comply with takeover regulations in the matter of Orient Tradelink.

The amount has to be paid along with a 10 per cent interest from August 1, 2019 till the date of actual payment.

Sebi in March 2008 issued a show cause notice against Aushim Khetarpal for allegedly indulging in market manipulation and creation of artificial volume in the scrip of Orient Tradelink Ltd.

Besides, he had failed to comply with the mandatory requirement of making a public announcement in accordance with the Takeover Regulations.

Later, Sebi asked Khetarpal to make an open offer for the acquisition of shares in the matter of Orient Tradelink.

The open offer made by the acquirer had opened on July 5, 2019 and closed on July 18, 2019 for acquisition of over 1 crore equity shares representing 20 per cent of the total voting share capital of the firm.

"As per information received by Sebi from the BSE, 1,09,65,000 equity shares were tendered in the open offer i.e 100 per cent acceptance and accordingly, the total maximum consideration payable under the open offer amounted to Rs 5,04,39,000," Sebi said.

Besides, it noted that Khetarpal had opened and escrow account with ICICI Bank wherein it deposited Rs 14 lakh. In addition, he had pledged 17.3 lakh equity shares of Orient Tradelink amounting to over Rs 1.1 crore with merchant banker Fast Track Finsec as security towards the obligation under the open offer.

However, Sebi said "there has been a shortfall in respect of the deposit of 25 per cent of the open offer consideration in the escrow account," and the acquirer had "prima facie" violated takeover norms.

"In the facts of the instant proceedings, it is observed that till date, the Acquirer has failed to ensure payment of consideration to all shareholders who had tendered their shares under the open offer," Sebi said.

Accordingly, Khetarpal has been asked to disgorge the balance open offer consideration amount of Rs 4.9 crore along with simple interest of 10 per cent.

The disgorged amount will be credited to the Investor Protection and Education Fund and will be utilised to make restitution of the investors of the firm who have tendered their shares in acceptance of the open offer.

Besides, Rs 14 lakh deposited by him in the escrow account shall stand attached with immediate effect and shall be utilised for payment of consideration to the eligible and identifiable investors of Orient Tradelink who have tendered their shares in acceptance of the open offer.

In a separate order, Sebi levied a fine of Rs 25 lakh to be paid "jointly and severally" by Peers Allied Corporation Ltd and its 11 directors for operating unregistered collective investment schemes.