Description

SEBI order in compliance with Supreme Court directions regarding settlement proceedings involving Bharat Nidhi Limited and related entities for alleged misrepresentation of promoter shareholding and non-compliance with minimum public shareholding requirements.

Summary

SEBI has issued an order in the matter of Bharat Nidhi Limited and seven other entities (Vineet Jain, Ashoka Marketing Limited, Arth Udyog Limited, Matrix Merchandise Limited, Mahavir Finance Limited, TM Investment Limited, and Sanmati Properties Limited) in compliance with directions from the Hon’ble Supreme Court of India dated October 06, 2025. The case involves allegations of misrepresentation of promoter shareholding as public shareholding and non-compliance with minimum public shareholding requirements, leading to violations of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Key Points

  • Show Cause Notice issued on October 28, 2020 alleging violations of Section 12A(a) and (b) of SEBI Act read with Regulations 3(b), (c) and 4(1) of PFUTP Regulations
  • Noticees filed settlement applications under SEBI (Settlement Proceedings) Regulations, 2018
  • Settlement Order dated September 12, 2022 was initially passed settling the proceedings
  • Settlement Order was challenged by minority shareholders led by Ashok Dayabhai Shah and Pina Pankaj Shah through Writ Petitions (WP No. 447/2023 and WP No. 530/2023) before Bombay High Court
  • Settlement Order was subsequently revoked and withdrawn by SEBI under Regulation 28 for failure to comply with its terms
  • Current order issued pursuant to Supreme Court directions in Special Leave Petition (C) Nos. 19853-19855 and 19946-19948 of 2025
  • Eight entities identified as noticees including Bharat Nidhi Limited and related companies

Regulatory Changes

No new regulatory changes introduced. This order pertains to enforcement action under existing regulations, specifically SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

Compliance Requirements

  • Bharat Nidhi Limited was required to submit compliance report within 15 days of the initial settlement order (which has been revoked)
  • The matter is now subject to Supreme Court directions and further proceedings as determined by the order
  • Companies must maintain accurate disclosure of promoter vs public shareholding
  • Compliance with minimum public shareholding norms is mandatory

Important Dates

  • October 28, 2020: Show Cause Notice issued
  • September 12, 2022: Initial Settlement Order passed
  • October 10, 2022: Writ Petitions filed before Bombay High Court (WP No. 447/2023 and WP No. 530/2023)
  • October 06, 2025: Supreme Court Order issued
  • November 17, 2025: Current SEBI order issued

Impact Assessment

This case has significant implications for corporate governance and shareholder protection. The allegations involve serious misrepresentation of shareholding structure that affects the rights of minority shareholders. The revocation of the settlement order and Supreme Court intervention demonstrates the gravity of the matter. The enforcement action serves as a deterrent against manipulation of shareholding disclosures and emphasizes the importance of maintaining transparency in public shareholding requirements. Multiple entities being implicated suggests a coordinated scheme, which could have broader ramifications for investor confidence and regulatory oversight of listed companies.

Impact Justification

Supreme Court mandated order involving serious allegations of misrepresentation of shareholding structure and violations of PFUTP Regulations affecting minority shareholders