Mumbai, Jun 30 : Market regulator Sebi today settled charges of non-compliance of takeover norms against foreign institutional investor Merrill Lynch International after the company paid over Rs 40 lakh in settlement fees. While passing the consent order, Securities and Exchange Board of India (Sebi) said it has disposed of adjudication proceedings against the company and this order will come into force immediately.
Market regulator had initiated adjudication proceedings against Merrill Lynch in the matter of Gemini Communications to inquire into the alleged violation of Sebi (Substantial Acquisition of Shares and Takeover) Regulations. It found that Gemini Communications issued euro 1.5 crore Foreign Currency Convertible Bonds (FCCB) to Merrill Lynch in July 2007 with a maturity date on July 18, 2012.
As per the FCCB agreement, Merrill Lynch had a right to convert the bonds into shares during the conversion period period effective from August 1, 2007 to June 18, 2012 which would represent 1.97 crore shares (15.59 per cent) of the issuer’s share capital upon conversion. It was alleged that Merrill Lynch had made a disclosure of cessation of its right to convert FCCBs of the company to the stock exchanges on October 26, 2012 after a delay of four months, which should have been made on June 20 2012 or one month prior to the maturity date of July 18,2012.
Also, it was alleged that Merrill Lynch had made disclosure of revival of conversion on November 12, 2012 with a delay of over three months, which should have been disclosed by July 20, 2012. While the adjudication proceedings were in progress, Merrill Lynch submitted a consent order application to Sebi in August last year. It proposed to pay Rs 40.34 lakh as settlement fee. Under the consent mechanism, a company can settle an issue with the regulator after paying a penalty, without accepting or rejecting the charges against it.
After that, the consent terms were placed before the High Powered Advisory Committee of Sebi and the committee after deliberation “recommended that the case for settlement on payment of Rs 40.34 lakh towards?settlement?charges.” Consequently, the company remitted the amount towards the settlement charges.