Capital market regulator Sebi on Monday levied fines totalling Rs 11 lakh on seven entities for flouting regulatory norms in the matter related to SS Organics Ltd (now known as Oxygenta Pharmaceutical Ltd).
The regulator slapped a fine of Rs 5 lakh on SS Organics Ltd (SSOL) and Rs 6 lakh on six individuals -- Sai Sudhakar Vankineni, D Sadasiva Reddy, Gunreddy Krishna Reddy, Muralidhar Rambathri, Rajasekhar Reddy Puchakayala and Raghavender Rao.
The order came after Sebi conducted an examination in respect of the process followed by SSOL for approval and disclosure of related party transactions with ARR Capital Investment Pvt Ltd.
The focus of the examination was to ascertain if there was any possible violation of LODR (Listing Obligations and Disclosure Requirements) rules.
The regulator found that a loan transaction of Rs 15 crore executed between ARR and SSOL, which was further extended to Rs 35 crore, was more than the turnover of the firm for FY2019-20.
Hence, the transaction with ARR exceeds the limit of material transaction.
Also Read
It also found that ARR was the related party of SSOL and the three directors of ARR were holding directorship at SSOL as on the date of loan transaction.
"I note that SSOL had not taken shareholders' approval for the loan transaction with ARR although it exceeds the limit of material transaction.
"Also, the company had not even considered ARR as a related party and not taken approval of audit committee under LODR regulations. I also note that SSOL had not made subsequent disclosure of related party transaction as required under the norms," Sebi's Adjudicating Officer Sahil Malik said.
It also noted that three directors of the firm had disclosed their interest in ARR. However, after being aware of the relationship of the directors, the board failed to manage the conflict emerging from impugned transaction with ARR, which resulted in failure to fulfil board of directors' responsibilities given in code of conduct under the LODR rules.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
