New Dehi 24 August : Amidst the backdrop of an attempt to take over of NDTV by Adani Media Works, a Securities and Appelate Tribunal (SAT) order of July 20th, 2022 takes on significance.On Wednesday, the price of NDTV’s shares was trading at around 388 rupees.
The SAT has concluded that the loan contract signed by NDTV promoters with VCPL did not transfer control of NDTV to VCPL directly or indirectly.therefore, the conclusions given by the AO regarding the fact that the loan contract is designed in the way that in fact , it transfer control of NDTV directly to VCPL indirectly is not sustainable.
The conclusions in this respect were put aside.
The issue to be resolved is which of the minutes as well as the content of the minutes of August 5 2015 of the Board of Directors of NDTV were required to be released under Clause under the clause 36 of the listing agreement, SAT said in its July 20 order.
In this case the AO has concluded that the information regarding VCPL loan agreements was significant and price-sensitive in nature because of the factual control exercised by VCPL.
“We have previously concluded that there was not oversight of VCPL over NDTV and, as such on this basis, the conclusion that the terms of the loan agreements were price-sensitive in nature is not a valid argument,” the Tribunal said.
“However, considering the peculiar structure of the loan agreement, coupled with the fact that the exercise of the warrant option or the call option if invoked would have a bearing on the performance/operations of the company and therefore, to that extent, when the matter was discussed in the minutes of the Boards’ meeting on August 5, 2015, the said minutes should have been disclosed under Clause 36 of the listing agreement.The disclosure would allow shareholders and the general public to make an informed choice regarding the decision to invest or not invest in the shares of NDTV,” SAT stated.
In light of the above circumstances, we’re of the opinion that NDTV in not disclosing the minutes of the meeting on August 5, 2015 to the exchange was in violation of the clause 36 of the listing agreement, SAT said.
Therefore, while confirming the decision of the AO only with regards to the violation of the Clause 36 of the listing agreement, we believe that the sanction of 5 crores of rupees seems too high.
A maximum fine of one crore could be enforced pursuant to section 23A(a).Based on the context of the matter, and taking into account the elements involved as far as Section 23J of the SCRA is concerned, we conclude that the AO himself has stated that the quantifiable benefit or unfair advantage derived from NDTV or the amount of loss suffered by investors due to the impact of the default is not quantified.
Thus the penalty for a simple breach of non-disclosure in accordance with Clause 36 of the listing agreement can’t be penalized beyond the maximum amount stated in the clause.
In light of the facts and circumstances We take into consideration the facts and circumstances, we of the view that the fine of 5 crore rupees should be decreased to Rs 10 lakhs as per the section 23A(a) of the SCRA, SAT said in an order.
In light of the above decision, the impugned judgment dated June 26, 2018, and pronounced by the WTM in Appeal No.293 of 2018 VCPL in vs.SEBI cannot be sustained and is struck down.The appeal is accepted with no order on costs.
In this regard, the direction given by the WTM being overly broad are removed.Since a penalty was given, we don’t see any reason for us to issue a new instructions under Section 11B of the SEBI Act.The appeals are allowed partially with no decision on costs.
Appeal No.80 of 2021 NDTV in vs.SEBI against the order that was issued on 29 December 2020, which was passed by the AO is partly granted.The violation of Clause 36 of the listing agreement is affirmed.However the penalty of 5 crores of rupees has been reduced to Rs 10 lakhs the SAT stated.
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