ORDER OF THE ADJUDICATING OFFICER UNDER SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 AGAINST M/S KARUNA CABLES LTD FOR THE VIOLATION OF REGULATION 53A of SEBI(DEPOSITORIES AND PARTICIPANTS) REGULATIONS, 1996 READ WITH SECTON 15HB OF SEBI ACT, 1992.
I was appointed as Adjudicating Officer by SEBI vide order dated 8th December, 2003, to inquire into and adjudge the alleged contravention of Regulation 53A of SEBI (DP) Regulations, 1996, by M/S KARUNA CABLES LTD (hereinafter referred to as the company), in the matter of appointment of common share registrar for handling share registry work both for demat and physical securities.
Accordingly, a show cause notice dated January 12, 2004, was issued to the company. After receiving the reply dated 21.01.2004, an opportunity of personal hearing was granted.
SHOW CAUSE NOTICE AND REPLY
The show cause notice dated 12.1.2004 alleges that the company did not appoint a common share transfer agent in the matters relating to transfer of securities, maintenance of records of holders of securities, handling of physical securities and establishing connectivity with the Depositories at a single point as required under Regulation 53A of SEBI(Depositories and Participants) Regulations, 1996.
The company filed its reply vide letter dated 21.01.2004. Shri Pankaj B Gupta, Company Secretary, M/S Karuna Cables Ltd, appeared and made the following submissions :
1) That the company had appointed M/s. Purva Share Registry India Pvt. Ltd. located at 33, Printing House, 28-D, Police Court Lane, Behind Old Hanuman House, Fort, Mumbai-400 001 as Share Transfer Agent for both physical and electronic transfer of shares and for maintenance of records etc at a single point in terms of 53 Regulation 53A of SEBI(DP) Regulations, 1996. Copies of tripartite agreement dt.26.03.03 with NSDL and with CDSL dt.06.03.03 were filed.
2) Copy of the agreement between share transfer agent and the company dated 16.12.2002 was also furnished. It was also stated that the company had informed about the appointment of the share registrar to NSE, BSE, NSDL and CDSL vide letters dated 17.01.2003. However, the said letters were not furnished.
In view of the above, it was pleaded not to impose any penalty as it had complied with Regulation 53A.
APPRECIATION OF EVIDENCE AND FINDINGS
Regulation 53A of SEBI (DP) Regulations, 1996 came into force with effect from 02.09.2003 and 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 object of the appointment of common share agency as can be seen from SEBI Circular No. SEBI Circular No. D&CC/FITTC/CIR-15/2002 dated December 27, 2002, was to avoid :
a) delay in dematerialization
b) non-reconciliation of share holding due to lack of proper co-ordination among the concerned agencies or departments, which is adversely affecting the interest of the investors.
Hence, it was directed to appoint common agency either in-house or through SEBI registered RTA for share registry work relating to physical and demat shares of the company.
As mentioned earlier, the company had filed copies of tripartite agreements dt.26.03.03 with NSDL and dt.06.03.03 with CDSL confirming that the company had appointed M/s. Purva Share Registry India Pvt. Ltd. as common share registrar for both physical and electronic transfer of shares and for maintenance of records etc at a single point in terms of 53 Regulation 53A of SEBI(DP) Regulations, 1996. The copy of the agreement dated 16.12.2002 between the company and the share transfer agent filed by the company clearly reveals the role of the registrar as a common share agency for both demat and physical shares.
It may be observed that the said regulation came into force w.e.f. September, 2003 and the company had appointed M/s. Purva Share Registry India Pvt. Ltd. as common share registrar much earlier.
ORDER
As the company had already complied with Regulation 53A of SEBI (Depositories and Participants) Regulations, 1996 for the aforesaid reasons, it is not just, fair & proper to impose any penalty in terms of Chapter VIA of SEBI Act, 1992. Hence, no penalty is imposed on M/s Karuna Cables Ltd.
| Date: NOVEMBER 1, 2004 |
S V Krishna Mohan |
| Place: Mumbai |
Adjudicating Officer |