Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 107.5 million on Aksh Optifibre and its five directors in a matter related to manipulation in issuance of global depository receipts (GDR). Consequently, all the five directors have to pay a fine of Rs 1-2 million each.
The order follows a probe conducted by the regulator between August-September 2010.
As per SEBI’s investigation, the company had issued 1.17 million GDRs worth $25 million in September 2010. However, the entire 1.17 million GDRs were subscribed by only one entity, Vintage FZE, presently known as Alta Vista International FZE, on obtaining a loan from European American Investment Bank AG (EURAM Bank).
Aksh Optifibre served as guarantor and deposited the entire GDR proceeds received from Vintage FZE with EURAM Bank as security against the loan for subscribing to the GDRs issued by the company.
Moreover, the company failed to make requisite disclosures pertaining to the GDR issue. The firm did not make disclosures regarding pledge agreement entered into with EURAM Bank for subscription of GDRs, delisting of GDRs on Luxembourg Stock Exchange and about termination of GDR facility by the global depository, Bank of New York Mellon, which was price sensitive information.
As per SEBI, the scheme of arrangement in allotting GDR issue to Vintage along with false and misleading corporate announcements led to conclusion that the same were done in a fraudulent manner. Accordingly, the regulator has levied monetary penalty on the firm and the directors.