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Order against Viraj Forgings Limited

Jun 24, 2005
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Orders : Orders of AO

 

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

UNDER RULE 5(1) OF THE SEBI (PROCEDURE FOR HOLDING ENQUIRY AND IMPOSING PENALTY BY THE ADJUDICATING OFFICER) RULES, 1995 READ WITH REGULATION 53A OF SEBI (DEPOSITORIES AND PARTICIPANTS) REGULATIONS, 1996 AND SECTION 15HB OF THE SEBI ACT, 1992 AGAINST VIRAJ FORGINGS LIMITED

 

 

 

1.0          I was appointed as the Adjudicating Officer by Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) to enquire and adjudge the alleged contravention of Regulation 53A of (Depositories and Participants) Regulations, 1996 read with Section 15 HB of SEBI Act, 1992 by M/s VIRAJ FORGINGS LIMITED (hereinafter referred as the ‘company’ ) for alleged failure to appoint a common share agency for handling share registry work, both for dematerialized and physical securities.

 

2.0  SHOW CAUSE NOTICE

2.1 Accordingly, a Show Cause Notice under Rule 4(1) of the SEBI (Procedure for holding Enquiry and Imposing Penalty by the Adjudicating Officer) Rules, 1995 was issued to the company asking them to show cause as to why Adjudicating proceedings should not be held against them for the alleged violation of the provisions of Regulation 53A of the said Regulations and as to why penalty should not be imposed on the company under section 15HB of the Act. The company was advised to make their submissions, if any, along with supporting documents that the company wished to rely upon, within 14 days from the date of the receipt of the notice.

 

3.0   REPLY AND PROCEEDINGS

3.1         The company submitted reply vide their letter dated 21st January 2004. Shri Vinod Shah, Practicing Company Secretary had appeared and and filed an additional reply dated 2nd April 2004. The following submissions were made :

  • The Company has 4924 shareholders only as per distribution and pattern of shareholding attached herewith.
  • The Company has in-house share transfer facility at the above corporate office wherein all the matters relating to transfer of shares, maintenance of records of holders of shares, handling of physical securities are handled at a single point.
  • The Company has not appointed any share transfer agent as the volume of trading is very low.
  • During the financial year 2002-2003 (1.4.2002 to 31.3.2003) there were 6 transfer had taken place for 192424 number of shares only. Thereafter i.e. from 1.4.2003 till date there is no transfer of shares request has been received by the Company.
  • The Company has not received any complaint from shareholders relating to the share transfer work and the company promptly attents to the queries from shareholders.
  • The shares of the company are in physical format and are not in demat due to the fact that there very few transfer takes place and practically there is no volume trading in the shares.
  • Notwithstanding the above, they had appointed M/s. Sharex (India) Pvt. Ltd as their RTA on 17.3.2003 and also applied to both the depositories for allotment of ISIN.

 

4.0 Appreciation of evidence and findings

Regulation 53A of the said Regulations was inserted with effect from 02.09.2003 which reads as under:

“All matters relating to transfer of securities, maintenance of records of holders of securities, handling of physical securities and establishing connectivity with the depositories shall be handled and maintained at a single point i.e. either in-house by the issuer or by a Share Transfer Agent registered with the Board”

The shares of the company are in physical form and all shares transfers, maintainance of records etc is done in-house by the company. There seems to be no trading interest in the shares of the company as there were only 6 transfers in the financial year 2002-2003 and in the subsequent years there was no transfers till 21.1.2004. It is also stated that there are no share holder complaints.  The question of establishing connectivity with the depository would arise when the shares are in demat form. No ISIN No. for the scrip is allotted by the depository which means that the shares are in physical form. NSDL vide its email dated 27th May 2005 has informed that the shares of the company has not joined NSDL for demat. CDSL also vide its email dated 27.5.2005 has confirmed that No ISIN was allotted to the shares of the company.

 

 

5.0 ORDER

As the shares of the company are in physical form and all transfers, maintenance of records etc are handled at a single point, there is no violation of Regulation 53A of the SEBI((Depositories and Participants) Regulations, 1996 for the aforesaid reasons.

Accordingly, no penalty is called for on the company viz. Viraj Forgings Ltd.

 

 

Date:  24 June 2005                                                        S.V. Krishna Mohan

Place:  Mumbai                                                                Adjudicating Officer