New Delhi: Market regulator SEBI has barred realty firm Omaxe ltd. and five others from accessing the securities market for up to one year and imposed a fine totalling ₹1.92 crore for allegedly creating an artificial public shareholding structure to meet minimum public shareholding requirements.
Omaxe has been restrained from accessing the securities market for three months, while promoters Rohtas Goel and Jai Bhagwan Goel, group companies Dream Home Developers Pvt Ltd and Guild Builders Pvt Ltd, have been barred for one year.
Sunil Goel, former joint managing director of Omaxe, has also been prohibited from the securities market for one year, the order noted.
In its order passed on Thursday, SEBI said Omaxe failed to achieve the prescribed 25% minimum public shareholding (MPS) through independent public shareholders, as certain entities had acquired the company’s shares using funds originating from Omaxe and its group entities.
SEBI noted that “minimum public shareholding requirements were artificially met through funding of certain entities to acquire shares of the company and such entities were thereafter disclosed as public shareholders”.
The regulator said funds originating from Omaxe and its group entities were routed through multiple entities and used to acquire its shares in the names of entities shown as public shareholders.
Omaxe and its group entities routed ₹46.50 crore through DVM Realtors Pvt Ltd (DRPL), Garv Buildtech Pvt Ltd and Jeet Builders Pvt Ltd (JBPL) to ultimately fund the acquisition of its own shares during the Offer for Sale (OFS) windows on June 3, 2013, and October 29, 2013, the regulator noted.
“These transactions cannot, therefore, be viewed as isolated fund transfers or independent share acquisitions.
“The scheme and artifice lay in creating the appearance of independent public shareholding through entities whose acquisition of Omaxe shares had been financed through funds originating from Omaxe/group entities and thereafter using such holdings for representing regulatory compliance,” SEBI said in its 91-page order.
The regulator said the arrangement created the appearance of independent public shareholding, while the underlying fund trail showed otherwise.
After the June 3, 2013, offer for sale (OFS), exclusion of the funded holdings would have reduced Omaxe’s public shareholding from 16.21% to around 14.57%, the order said.
Similarly, after the October 29, 2013, OFS, public shareholding would have been around 19.04% instead of the reported 20.97%. Even after a subsequent bonus issue, excluding the funded holdings and the consequential bonus entitlement would have reduced the reported public shareholding from 25.01% to around 22.71%, SEBI said.
The regulator held that the arrangement constituted a “fraudulent and deceptive scheme and artifice” in connection with dealing in securities and found violations of provisions of the SEBI Act and Prevention of Fraudulent and Unfair Trade Practices Regulations.
SEBI also found Omaxe and the concerned noticees liable for violations relating to minimum public shareholding and disclosure of shareholding patterns.
Accordingly, the entities have been “restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities (including units of mutual funds), directly or indirectly, or being associated with the securities market in any manner, whatsoever” for up to one year.
The regulator also imposed a fine of ₹1.92 crore on them. Individually, the regulator levied a fine of ₹27 lakh each on Omaxe, Dream Home Developers and Guild Builders, as well as ₹37 lakh each on Rohtas Goel, Sunil Goel and Jai Bhagwan Goel