Description

SEBI imposed penalties on Kunvarji Finstock Private Limited and Dr. J. Murali Manohar for violations of SAST Regulations and Merchant Bankers Regulations in connection with an open offer for Mediaone Global Entertainment Limited.

Summary

SEBI issued an adjudication order (Order/JS/DP/2025-26/31781-31782) against Kunvarji Finstock Private Limited and Dr. J. Murali Manohar for violations related to an open offer for Mediaone Global Entertainment Limited. The proceedings were initiated under Section 15-I of the SEBI Act, 1992 following an examination of possible violations of SAST Regulations and Merchant Bankers Regulations. Kunvarji Finstock was charged with violations of Regulations 27(2) and 27(5) of SAST Regulations and Regulation 13 read with Clause 4 of Schedule-III of Merchant Bankers Regulations, while Dr. J. Murali Manohar was charged with violation of Regulation 25(3) of SAST Regulations.

Key Points

  • Adjudication proceedings initiated against two entities: Kunvarji Finstock Private Limited (PAN: AAACK8760E) and Dr. J. Murali Manohar (PAN: ATTPM0621R)
  • SEBI examination revealed violations related to open offer process for Mediaone Global Entertainment Limited
  • Kunvarji Finstock alleged to have violated SAST Regulations 27(2) and 27(5), and Merchant Bankers Regulations 13 read with Clause 4 of Schedule-III
  • Dr. J. Murali Manohar alleged to have violated SAST Regulation 25(3)
  • Adjudicating Officer appointed under Section 19 and Section 15-I of SEBI Act
  • Show Cause Notice issued on October 10, 2023
  • Kunvarji Finstock initially sought settlement under SEBI Settlement Proceedings Regulations, 2018 (application filed November 21, 2023)
  • Settlement application status referenced as of March 21, 2024

Regulatory Changes

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

  • SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
  • SEBI (Merchant Bankers) Regulations, 1992
  • SEBI Act, 1992

Compliance Requirements

  • Merchant bankers must comply with Regulation 13 read with Clause 4 of Schedule-III of Merchant Bankers Regulations
  • Acquirers and persons acting in concert must adhere to Regulations 27(2) and 27(5) of SAST Regulations regarding open offer obligations
  • Compliance with Regulation 25(3) of SAST Regulations is mandatory for all parties involved in substantial acquisitions
  • Entities must ensure proper adherence to takeover regulations during open offer processes

Important Dates

  • September 25, 2023: Initial Adjudicating Officer appointed
  • October 10, 2023: Show Cause Notice issued
  • October 31, 2023: Both noticees acknowledged receipt of SCN
  • November 21, 2023: Kunvarji Finstock filed settlement application
  • March 21, 2024: Update on settlement application status
  • April 21, 2025: Current Adjudicating Officer appointed pursuant to reallocation

Impact Assessment

Market Impact: Medium - This adjudication order serves as a reminder to merchant bankers and acquirers to strictly comply with SAST Regulations during open offer processes. While specific to Mediaone Global Entertainment Limited, it has broader implications for market participants engaged in takeover activities.

Regulatory Impact: The order demonstrates SEBI’s continued vigilance in enforcing takeover regulations and merchant banker obligations. The proceedings under Section 15HB of SEBI Act highlight regulatory scrutiny of substantial acquisition processes.

Operational Impact: Merchant bankers and potential acquirers must ensure robust compliance mechanisms for open offers, including proper disclosure and adherence to procedural requirements under SAST Regulations. The case underscores the importance of regulatory compliance in takeover transactions to avoid penalties and enforcement actions.

Impact Justification

Adjudication order imposing penalties for regulatory violations in takeover process. Significant for market participants involved in open offers and merchant banking activities, demonstrating SEBI enforcement action.