Falcon Executive Chairman Pawan Kumar Ruia has been barred from the securities market for 2 years and Executive Director Sunil Bhansali for one year.
Besides, former directors of Dunlop — S Ravi, Mohan Lall Chauhan and Damodar Prasad Dani — are restrained from accessing the securities market for six months. They are further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of one year.
In addition, they have also been restrained from being associated with any other listed company or a Sebi-registered intermediary, in any capacity including as a director or key managerial person, directly or indirectly, for their respective period of restraint.
The order follows an investigation into acquisition of shares of Falcon Tyres Ltd and Dunlop India Ltd by certain entities through preferential allotment between April 26, 2012 and April 28, 2012.
Sebi noted that the Calcutta High Court on January 31, 2013, directed winding up of Dunlop.
Falcon and Dunlop issued shares on a preferential basis with an intention to circumvent the minimum public shareholding (MPS) requirement, the probe found.
The entire scheme of assignment of loan by a group company of Falcon, Manali
and Dunlop’s group company, Stephens Financial Services to three entities — Suncap Commodities, Salputri Commerce and Regus Impex. Subsequent conversion of the loan into equity shares allotted by way of preferential allotment, was done by Falcon and Dunlop in collusion with their group companies and the three preferential allottees, with a view to avoid MPS requirement.
With the issuance of equity shares on preferential allotment to Suncap Commodities, Salputri Commerce and Regus Impex, the public shareholding in Falcon and Dunlop fell below the required minimum of 25 per cent which is in violation of the provisions of listing agreement.
