Description

SEBI settlement order (SO/AK/GN/2025-26/8384-8388) resolving adjudication proceedings against Zuari Agro Chemicals Limited and four individuals for alleged violations of LODR Regulations and PFUTP Regulations.

Summary

SEBI has issued Settlement Order No. SO/AK/GN/2025-26/8384-8388 in the matter of Zuari Agro Chemicals Limited (ZACL). The order settles adjudication proceedings initiated against five applicants — Zuari Agro Chemicals Limited and four individuals (Sunil Sethy, R K Gupta, Nitin Manguesh Kantak, and Vijayamahantesh Khannur) — for alleged violations of SEBI’s LODR Regulations 2015 and PFUTP Regulations 2003.

Key Points

  • Settlement Order No. SO/AK/GN/2025-26/8384-8388 covers five applicants (Application Nos. 8384–8388/2025).
  • Applicant 1 (Zuari Agro Chemicals Limited, PAN: AAACZ3924H) allegedly violated SEBI (LODR) Regulations 2015 including Regulations 4(1), 4(2)(e)(i), 23(2), 23(4), and 48, read with Ind-AS-8, relating to under-reporting of losses.
  • Applicant 2 (Sunil Sethy, PAN: ABTPS5430L) allegedly violated Section 12A of SEBI Act and PFUTP Regulations 3 and 4.
  • Applicants 3, 4, and 5 faced overlapping LODR, PFUTP, and Section 27 SEBI Act violations including related-party transaction non-compliances (Regulations 23(2) and 23(4)) and board/audit committee certification failures (Regulation 17(8), Schedule II Part B).
  • A Show Cause Notice was issued on January 14, 2025 under Rule 4(1) of the Adjudication Rules r/w Section 15-I of SEBI Act.
  • The Adjudicating Officer was appointed on December 4, 2024.

Regulatory Changes

No new regulatory changes introduced. This order applies existing provisions of:

  • SEBI (LODR) Regulations, 2015
  • SEBI (PFUTP) Regulations, 2003
  • SEBI Act, 1992 (Sections 12A, 15HA, 15HB, 15-I, 19, 27)
  • Ind-AS-8 (Accounting Policies, Changes in Accounting Estimates and Errors)

Compliance Requirements

  • The applicants have settled the proceedings by agreeing to settlement terms as determined by SEBI’s High Powered Advisory Committee (HPAC) process.
  • No further adjudication action will be taken against the applicants with respect to the alleged violations covered in this order, subject to compliance with settlement terms.
  • Listed companies must ensure accurate financial reporting per Ind-AS-8 and timely disclosures under LODR Regulations.
  • Directors and key managerial personnel must ensure proper certification and compliance with related-party transaction approval requirements.

Important Dates

  • December 4, 2024: Adjudicating Officer appointed.
  • January 14, 2025: Show Cause Notice issued to all five applicants.
  • 2025-26: Settlement applications filed (Application Nos. 8384–8388/2025).
  • March 10, 2026: Settlement Order issued by NSE circular.

Impact Assessment

The settlement resolves enforcement risk for Zuari Agro Chemicals Limited and four associated individuals. The case highlights SEBI’s scrutiny of financial restatements and related-party transaction disclosures under LODR. For the broader market, this reinforces the importance of accurate Ind-AS-8 compliance and proper board-level certifications. The medium market impact reflects that this is a company-specific enforcement action with no systemic changes to trading or market operations.

Impact Justification

Formal SEBI settlement order involving a listed company and senior individuals for serious violations including under-reporting of losses, LODR non-compliance, and PFUTP regulations; settled under Section 15HA and 15HB of SEBI Act.