Capital market regulator SEBI has directed eight entities to make an open offer to the shareholders of Kanchan International Limited.
The market regulator directed the entities to pay 10 percent interest along with the offer price to the shareholders, who were holding the shares at the time, in violation of SEBI norms of the company.
Institutions have been asked to make an open offer within 45 days from the date when the coronovirus-induced lockdown will be lifted.
SEBI stated that the order would come into force at the end of the lockdown period on May 18, 2020, if the lockdown is extended beyond May 17, 2020.
The eight entities that have been asked to make the open offer are Kanchan Kitchen Aid Private Limited, Dinesh C. Khimawat, Usha D. Khimawat, Kanchan c. Khimawat, Bharat Piplia, Mahendra Khimawat, Chetan Khimawat and Marlex Products Limited.
Further, the restraint imposed on the entities before the securities reach the market, will only stand comfortably for the purpose of making a public announcement of the acquisition of the company’s shares.
SEBI noted that the sale of shares or market transfer of shares by these entities resulted in a change in the shareholding of promoter and promoter group entities and the share capital of the company also changed as the warrants were converted into equity shares.
In 2012, on two occasions, the share of entities increased by more than 5 per cent, starting an open offer under the SAST (Substantial Acquisition of Shares and Takeover) regulations.
However, these entities which were persons working in concert (PAC) have failed to make an open offer on two trigger dates, Sebi said in its order.
The regulator stated that directing the institutions to make two separate consecutive open offers would not yield any practical results.
Therefore, as a measure of feasibility and practicality, a single open offer by all acquaintances as well as individuals acting in concert would suffice in the facts and circumstances of the case.
Entities with an offer price pay interest at the rate of 10 percent per annum to shareholders who were holding shares in the company at the date of the breach and whose shares are accepted in open payments, after adjusting for dividend payments , Sebi said.
In a separate order, the regulator imposed a fine of Rs 5 lakh on BP FinTrade Private Limited and BP Comrade Private Limited.
These entities are linked to each other and many trades have been executed, resulting in negative LTP contributions, leading to a drop in value.
By doing so, they have violated the provisions of the PFUTP (prohibition of alcohol and unfair trade practices) regulations.