New Delhi: Markets regulator Sebi on Thursday slapped a fine of Rs 65 lakh on Apollo Tyres for violating norms pertaining to buyback of shares.
The ruling comes after the Securities Appellate Tribunal, in January 2017, had set aside the over Rs 1 crore penalty imposed by Sebi on Apollo Tyres in the matter and had directed the regulator to pass a fresh order.
According to the tribunal, the overall penalty amount was in excess of the limit prescribed under the Sebi Act.
It was alleged that shares of Apollo Tyres were bought back by the company and its promoters in contravention of the relevant section of the Companies Act and Sebi regulations. The violations were allegedly committed by the company in 2003.
In a fresh order on Thursday, Sebi said,"The noticee (Apollo Tyres) had bought back a controlling block of shares as per the scheme, but did not comply with the provisions of buy-back Regulations".
According to Sebi, Apollo Tyres did not follow any of the methods for repurchase of shares as specified under the buyback Regulation.
Under the Regulation 4(1) of buyback, a company can buyback shares through tender offer; open market through book building process via stock exchange; and from odd-lot holders.
"I am of the view that the noticee failed to comply with Regulation 4(1) of buyback Regulations while effecting the buyback of its shares," Sebi General Manager and Adjudicating Officer K Saravanan said in his 102-page order.
Further, the company failed to submit its board resolution dated April 24, 2003, authorising the buyback to the markets regulator with the requisite timeframe. The company also failed to issue a public notice within time limit about the extinguished shares.
Accordingly, the regulator has imposed "a penalty of Rs 65 lakh on the noticee viz Apollo Tyres Limited".
Earlier in July 2014, Sebi had levied a total fine of Rs 1.03 crore fine on Apollo Tyres for violating norms pertaining to buyback of shares.
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