It has also penalised P
, who was the chief executive officer and director of Cairn and two other directors, Aman Mehta and Neerja Sharma. They have been asked to pay Rs 15 lakh each.
Sebi had conducted an investigation of the sell orders placed on stock exchanges during the buyback period. The probe showed that out of 123 trading days, buy orders were placed by Cairn for 82 days on NSE and all 123 days on BSE.
It also found that Cairn did not place any buy orders on NSE on 24 days and placed orders for less than 5,000 shares on 14 days out of total 54 days on which the price was favourable for buyback and instead it placed orders in BSE where sell orders were much less
Sebi said Cairn had failed to achieve the minimum buyback size as it could not buyback even half the number of shares announced by it, despite availability of sufficient sell orders on NSE, when the market price was lesser than the maximum buyback price.
“..the public announcement and subsequent actions of Cairn show that the announcement of buyback of shares by Cairn was a misleading announcement designed to influence the decision of the investors and induce them to trade in the shares of Cairn which is reflected in the increased trading volume after the buyback announcement,” Sebi said in an order on Wednesday.
The regulator further alleged that the three directors who had signed the public advertisement had facilitated the company in making the misleading announcement.
“..it is alleged that by making the public announcement of buyback without any intent to fulfil it, the Noticees (Cairn & three directors) have acted fraudulently..” Sebi said.
Cairn had made a public announcement on January 14, 2014 for buyback of 17.08 crore equity shares of Rs 10 each at a maximum price of Rs 335 per share for a maximum amount of Rs 5,725 crores from the open market.
The buyback offer was scheduled to open on January 23, 2014 and close on July 22, 2014.
Cairn informed Sebi that as on June 27, 2014, it was able to buyback a total of 3.67 crore shares which represented 21.48% of the maximum buyback shares utilizing a total of Rs 1,225.45 crores which represented 28.59% of the maximum buyback size.
Cairn was not able to utilize the minimum amount of 50% of the buyback size as required under Sebi rules.
The company sought an extension of the buyback period which was not allowed by Sebi.
Subsequently, Cairn submitted that it could not achieve the minimum amount of 50% of buyback size. It asked Sebi to release the cash escrow of Rs 143.125 crores, containing 2.5% of buyback size.
In 2017, Cairn got merged with
.
