Description

SEBI settlement order against Mr. M. Manohar (Compliance Officer) and Mr. M. Vijaya Bhasker Reddy (Independent Director) for violations related to disclosure failures and financial statement irregularities at Brightcom Group Limited.

Summary

SEBI issued a settlement order against Mr. M. Manohar (former Compliance Officer) and Mr. M. Vijaya Bhasker Reddy (former Non-Executive Independent Director) of Brightcom Group Limited (BGL) following an investigation into misstatements and irregularities in the company’s financial statements for FY 2014-15 to 2019-20. The applicants filed settlement applications under SEBI (Settlement Proceedings) Regulations, 2018 to resolve the proceedings without admitting or denying the findings.

Key Points

  • Investigation initiated based on complaints received between October 2020 to March 2021 alleging misstatements/irregularities in BGL’s financial statements
  • Investigation period covered financial years 2014-15 to 2019-20
  • Show Cause Notice (SCN) dated September 03, 2024 issued to multiple noticees including the two applicants
  • Mr. M. Manohar (Compliance Officer from 14.08.2019 to 28.10.2021) allegedly failed to disclose initiation of forensic audit and did not ensure correct disclosure of shareholding pattern to exchanges
  • Mr. M. Vijaya Bhasker Reddy (Non-Executive Independent Director and Audit Committee Member from 26.06.2012 to 29.09.2015) allegedly failed to ensure published financial statements were in accordance with accounting standards and presented true and fair view
  • Settlement applications filed by both applicants under Settlement Regulations 2018
  • Internal Committee meeting held on May 14, 2025
  • Revised settlement terms proposed via email dated May 20, 2025

Regulatory Changes

No new regulatory changes introduced. This order pertains to enforcement of existing regulations.

Compliance Requirements

For Compliance Officers:

  • Must disclose initiation of forensic audits to stock exchanges
  • Must ensure accurate and timely disclosure of shareholding patterns to exchanges as per Regulation 6(2) of SEBI LODR 2015

For Independent Directors and Audit Committee Members:

  • Must ensure published financial statements comply with applicable accounting standards
  • Must ensure financial statements present a true and fair view of the company’s affairs as per Regulation 18(3) read with Part C of Schedule II of SEBI LODR 2015

Important Dates

  • October 2020 - March 2021: Complaints received against Brightcom Group Limited
  • Investigation Period: FY 2014-15 to FY 2019-20
  • September 03, 2024: Show Cause Notice issued
  • May 14, 2025: Internal Committee meeting with applicants’ representatives
  • May 20, 2025: Revised settlement terms proposed by applicants

Impact Assessment

Market Impact: Medium - The settlement order relates to past violations by specific individuals at Brightcom Group Limited. While it highlights serious compliance and disclosure failures, the impact is contained to the company and individuals involved.

Operational Impact: Medium - Reinforces the critical role of compliance officers and independent directors in ensuring accurate disclosures and financial reporting. Serves as a reminder to listed companies about the personal liability of key managerial personnel and board members for compliance failures.

Enforcement Significance: The settlement route allows resolution of proceedings without prolonged litigation while still holding individuals accountable for violations of listing obligations and financial reporting standards.

Impact Justification

Settlement order against company officials for financial irregularities and disclosure violations, indicating enforcement action but limited to specific individuals rather than broad market impact