Description

SEBI settlement order against Emmbi Industries Limited for violations related to misclassification of a director as independent while listing him in promoter group, settled for Rs. 12.35 lakh.

Summary

SEBI issued Settlement Order No. SO/JS/VC/2025-26/7680 against Emmbi Industries Limited (PAN: AAACE3423G) for violations of LODR Regulations. The company incorrectly showed a director as independent in the Corporate Governance Report while simultaneously including him in the promoter and promoter group list in the Shareholding Pattern Report. The case was settled through SEBI’s Settlement Proceedings for Rs. 12,35,000 (Rupees Twelve Lakh Thirty Five Thousand only), paid on October 11, 2025.

Key Points

  • Emmbi Industries Limited violated Regulation 16(1)(b)(ii) of LODR Regulations (independent director classification)
  • Violated Regulation 31(1)(b) read with Regulation 4(1)(e) of LODR Regulations (shareholding pattern disclosure)
  • Show Cause Notice (Ref. No. SEBI/EAD-3/BM/JR/020/1/2023) issued on December 28, 2023
  • Settlement application filed on February 02, 2024 without admitting or denying findings
  • High Powered Advisory Committee (HPAC) recommended settlement on September 06, 2024
  • Panel of Whole Time Members accepted HPAC recommendations
  • Settlement amount of Rs. 12.35 lakh paid on October 11, 2025

Regulatory Changes

No new regulatory changes introduced. This order enforces existing LODR Regulations regarding:

  • Proper classification of independent directors
  • Accurate disclosure in shareholding pattern reports
  • Distinction between independent directors and promoter group members

Compliance Requirements

  • Listed companies must ensure directors are not simultaneously classified as independent directors and members of the promoter/promoter group
  • Corporate Governance Reports and Shareholding Pattern Reports must contain consistent and accurate information
  • Proper due diligence required in director classification and disclosure filings
  • Companies should implement internal controls to prevent conflicting disclosures across regulatory reports

Important Dates

  • December 28, 2023: Show Cause Notice issued
  • January 15, 2025: Initial Adjudicating Officer appointed
  • February 02, 2024: Settlement application filed by Emmbi Industries Limited
  • April 02, 2025: New Adjudicating Officer appointed
  • May 07, 2024, May 29, 2024, August 13, 2024: Internal Committee meetings
  • August 29, 2024: Revised Settlement Terms proposed
  • September 06, 2024: HPAC recommended settlement terms
  • October 10, 2025: Notice of demand issued
  • October 11, 2025: Settlement amount paid

Impact Assessment

Company Impact: Emmbi Industries Limited faces monetary penalty of Rs. 12.35 lakh and reputational impact from the settlement order. The company must ensure future compliance with director classification and disclosure requirements.

Market Impact: Minimal broader market impact as this is a company-specific enforcement action. However, it serves as a reminder to listed companies about the importance of accurate and consistent disclosures in corporate governance and shareholding pattern reports.

Precedent Value: Reinforces SEBI’s strict approach to proper classification of independent directors and promoter groups, and demonstrates the settlement mechanism as an alternative to full adjudication proceedings.

Impact Justification

Company-specific settlement order for disclosure violations with monetary settlement of Rs. 12.35 lakh; no broader market impact or regulatory changes