Aug 03, 2004|
Orders of Chairman/Members
SECURITIES AND EXCHANGE BOARD OF INDIA
IN THE MATTER OF APPLICATION BY NAGARJUNA INVESTORS SERVICES LIMITED FOR RENEWAL OF CERTIFICATE OF REGISTRATION, AS A REGISTRAR TO AN ISSUE AND SHARE TRANSFER AGENT.
WTMN/MIRSD/ 72 / 8 /2004
1. Nagarjuna Investors Services Ltd., a company having its registered office at 1, Nagarjuna Hills, Punjagutta, Hyderabad (hereinafter referred to as ‘the applicant company’) submitted an application dated July 14, 2003 for renewal of registration under Securities and Exchange Board of India (Registrar to an Issue and Share Transfer Agents) Regulations, 1993 (hereinafter referred to as ‘the said regulations’) to Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) for renewal of certificate of registration for the purpose of carrying on the activities as a Registrar to an Issue and Share Transfer Agent. As per the said application for registration, the applicant company’s shares are held by the following entities, Nagarjuna Fertilizers and Chemicals Ltd., (30%), Nagarjuna Finance Ltd. (30%), Pennar Industries Ltd. (10%) and Vijayalakshmi Insecticides & Pesticides Ltd. (30%).
2.1 While considering the application it was noted that Nagarjuna Finance Ltd. (hereinafter referred to as ‘NFL’) is one of the promoters of the applicant company and owns 30% of equity of the applicant. It was noted that NFL was registered as an NBFC. It was gathered that the application for certificate of registration submitted by NFL was rejected by RBI for certain valid reasons. The company had not repaid the matured public deposits on time and thus violated the order passed by the Company Law Board; the company had not finalized its Balance Sheets as on March 31, 2002 and March 31, 2003 on time. And, NFL was understood to be facing a winding up petition under the provisions of Section 45 MC of the RBI Act, 1934.
2.2 It was also found that, SEBI had launched prosecution against Nagarjuna Securities Limited (hereinafter referred to as NSL) under the provisions of Section 24 of the Securities and Exchange Board of India Act 1992, read with SEBI (Stock Brokers and Sub Brokers) Rules and Regulations, 1992 and Section 23 (g) and (h) of the Securities Contracts Regulation Act 1956. 99% of equity of NSL, is held by NFL.
3. In the circumstances, SEBI formed a prima facie opinion that renewal of certificate of registration granted to the applicant company might not be appropriate as it cannot be deemed to be a "fit and proper person" in terms of regulation 6 (g) of the said regulations. The applicant company was informed of the above by SEBI and was advised to avail an opportunity of hearing before the Board, if it so desired and to intimate to SEBI within 15 days of receipt of the letter of its intention to be heard. It is noted that the applicant company did not avail of the opportunity but, vide its letter dated May 07, 2004, sought six months time to make alternative arrangements.
4. I have perused the application for renewal of certificate of registration filed by the applicant, the material available on record and the facts and circumstances of the case. It is noted that the application for certificate of registration as NBFC submitted by NFL, a major shareholder and promoter of the applicant company, was rejected by the concerned regulator for certain valid reasons and NFL is heading towards winding up. Further SEBI has launched prosecution against NSL which is almost a wholly owned subsidiary of the applicant. In view of this, the applicant company cannot be considered a fit and proper person to continue to operate in the securities market as an intermediary in terms of the provisions of regulation 6(g) of the said regulations. Therefore, the renewal of certificate of registration to the applicant company as Registrars to an Issue and Share Transfer Agent would not be in the interest of investors in securities market. It is noted that the applicant company has not availed of an opportunity of being heard in the matter and that it has already taken steps to make alternative arrangements in respect of their existing clients. It is also noted that there is only one client left with the applicant company, that too, a group company. In view of the above, it is not considered necessary to grant six months time as sought for making alternative arrangements.
5. Therefore, pursuant to the powers conferred upon me under Regulation 10 of SEBI (Registrar to an Issue and Share Transfer Agents) Regulations, 1993, read with section 19 of Securities and Exchange Board of India Act 1992, I hereby direct that the application for renewal of certificate of registration applied by Nagarjuna Investors Services Ltd. as Registrar to an Issue and Share Transfer Agent be rejected. This order will come into effect on expiry of 21 days from the date of this order.
||T. M. NAGARAJAN
Date: August 03, 2004
|WHOLE TIME MEMBER
|| SECURITIES AND EXCHANGE BOARD OF INDIA