Carlyle deal: PNB Housing Finance, 12 individuals settle case with SEBI
PremiumThe dispute involves alleged rules violations in the issue of preferential securities to the US-based Carlyle Group for a venture that was later abandoned.
PNB Housing Finance and 12 other people reached a settlement with markets regulator Securities and Exchange Board of India (SEBI). This is in a dispute involving alleged rules violations in the issue of preferential securities to the US-based Carlyle Group for a venture that was later abandoned.
Together, the 12 people who were directors of the firm as of May 31, 2021 and PNB Housing Finance, which is a division of the state-owned Punjab National Bank, paid ₹72.76 lakh as settlement. According to an order issued by the SEBI on July 19, the sum includes ₹44.26 lakh in legal expenses.
The ruling was made after PNB Housing Finance and its directors approached SEBI with a proposal to resolve the alleged LODR (Listing Obligations and Disclosure Requirement) rules violations in the Carlyle Group case through a settlement order "without admitting or denying the findings"
"The proceedings that may have been initiated for the alleged defaults... are settled qua the applicants (13 applicants)," the regulator said in the settlement order.
The dispute is related to PNB Housing Finance's corporate announcement in May 2021 that its board of directors had approved the preferential issue of shares and warrants to Carlyle Group firms.
The pricing of the shares that would be offered to investors caused controversy shortly after the preference share offering was announced. SEBI expressed concerns, halted the transaction, and demanded that the shares be revalued.
PNB Housing Finance then appealed the decision to the Securities Appellate Tribunal (SAT), which issued a divided decision in August 2021. Later, SEBI filed a petition with the Supreme Court. PNB Housing Finance, however, later opted against moving forward with the preferential offering.
According to the company's articles of association (AoA), the applicants were accused of failing to get a registered valuer's report and, by failing to account for the control premium in the preferential issue's pricing, of failing to consider the interests of all stakeholders.
Additionally, it was claimed that the applicants did not adequately and promptly disclose material information to the stock markets. These actions allegedly violated LODR regulations.
Apart from PNB Housing Finance, those who settled the case with SEBI include Rajneesh Karnataka, Sunil Kaul, Neeraj Vyas, CH SS Mallikarjuna Rao, Chandrasekaran Ramakrishnan and Gita Nayyar. Other individuals are Sudarshan Sen, Nilesh S Vikamsey, Tejendra Mohan Bhasin, Hardayal Prasad, Ashwani Kumar Gupta and Kapil Modi
All the 12 individuals were directors of PNB Housing Finance as of May 31, 2021, the regulator noted. In June 2021. SEBI through separate letters to the company and 12 individuals had sought their explanations.
"... why it should not be construed that the directors have failed to discharge the responsibility cast upon them under law, including the statutory responsibility towards minority shareholders, and consequently why appropriate actions in terms of law be not considered for such failure," as per the similarly-worded letters.
In response, the applicants had filed for settlement of the case.
(With PTI inputs)
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