Securities and Exchange Board of India: The Securities and Exchange Board of India (‘SEBI’) initiated adjudicating proceedings against Smart Infraproperties (P) Ltd. (‘Smart Infraproperties’) and Yuvika Tradewing LLP (‘Yuvika Tradewing’), for delayed disclosure under Regulations 29(1) and 29(2) read with Regulation 29(3) of Substantial Acquisition of Shares and Takeovers Regulations, 2011 (‘SAST Regulations’). Jai Sebastian (Adjudicating Officer) found both noticees guilty of non-compliance and failure to make timely disclosures regarding their share transactions in Cressanda Railway Solutions Ltd. (‘Cressanda’). Consequently, a penalty of Rs 10,00,000 was imposed on Smart Infraproperties and Rs 2,00,000 on Yuvika Tradewing.
Background:
Cressanda, listed on the Bombay Stock Exchange (‘BSE’) came under examination conducted by SEBI to review the compliance of the provisions of the SAST Regulations in respect of acquisition and disposal of its share. It was alleged that Smart Infraproperties, the seller of shares in Cressanda, made delayed disclosures, ranging from 26 to 62 days, for four transactions conducted on 30-11-2021, 6-12-2021, 20-12-2021 and5-1-2022. These transactions significantly reduced its shareholding from 30.12 per cent to 1.84 per cent of the total outstanding shares, thereby violating the provisions of Regulation 29(2) read with Regulation 29(3) of the SEBI Regulations.
Similarly, Yuvika Tradewing, the acquirer of 6.59 per cent shares of Cressanda, violated the provisions of Regulation 29(1) read with Regulation 29(3) of the SAST Regulations by making a delayed disclosure of the transaction conducted on 5-1-2022. The disclosure was delayed by 26 days, thereby breaching the 5 per cent threshold that mandates disclosure.
Subsequently, SEBI issued show-cause notices to both entities on 12-12-2024 under Rule 4 of the SEBI Rules, 1995 (‘Rules’) read with Section 15-I of the SEBI Act to show cause as to why an inquiry should not be held against them and why penalty, if any, should not be imposed on them in terms of the provisions of the section 15A(b) of the SEBI Act for the violations alleged to have been committed.
SEBI noted that both entities were given multiple opportunities to respond to the show-cause notice and appear for a personal hearing, but neither responded nor appeared. Therefore, the proceedings were conducted ex-parte, presuming that the charges alleged against the entities in the show cause notice were admitted by them.
Analysis and Decision:
SEBI emphasised that Regulation 29(2) read with 29(3) of SAST Regulations mandated any person (with persons acting in concert) holding 5 per cent or more shares or voting rights in a target company, to disclose any change exceeding 2 per cent since the last disclosure to the stock exchanges and the target company within 2 working days of acquisition/disposal. Similarly, Regulation 29(1) read with 29(3) of the SAST Regulations mandated that any acquirer along with persons acting in concert who acquired shares in a target company, which together with shares already held crossed the 5 per cent threshold of total outstanding shares, disclosed their aggregate shareholdings and voting rights to the stock exchanges where the target company was listed and to the target company within 2 working days of such acquisition.
SEBI highlighted that it had previously issued directions in the matter of Cressanda for violations of the provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 due to repetitive nature of default. SEBI further highlighted that disclosure requirements existed to ensure market transparency and empowered investors to make informed investment decisions. Though no specific monetary gains or unfair advantages were quantified, SEBI noted that the promoter group’s holding dropped to 0.07 per cent while public shareholding reached 99.93 per cent.
SEBI cited Milan Mahendra Securities (P) Ltd. v. SEBI, 2006 SCC OnLine SAT 268 wherein it was held that the object of the Regulations was to give equal treatment and opportunity to all shareholders and protect their interests, and, the purpose of these disclosures was to bring about transparency in the transactions and assist the Regulator to effectively monitor the transactions in the market. SEBI further observed that the circumstances under which the promoter and promoter’s group reduced their holding in Cressanda gave enough indications as to the fact that the investors, if they had known at the relevant time that the promoter and promoter group was drastically reducing its holding, might have been cautious while purchasing the shares of Cressanda.
SEBI, exercising its powers under Section 15-I of the SEBI Act read with Rule 5 of the Rules, imposed monetary penalties on both entities for non-compliance with mandatory disclosure and fined Smart Infraproperties and Yuvika Tradewing with Rs 10 lakh and Rs 2 lakh respectively.
[In the matter of Cressanda Solutions Ltd., Adjudication Order No. Order/JS/YK/2025-26/31531-31532, dated 11-7-2025]
