Description

SEBI adjudication order against Lenus Finvest Private Limited for failure to disclose pledge transactions and annual encumbrance declarations during acquisition of Eiko Lifesciences Limited shares.

Summary

SEBI issued Adjudication Order No. Order/AK/RK/2025-26/31950 against Lenus Finvest Private Limited (PAN: AACCL9703E) for violations of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 in connection with the acquisition of shares of Eiko Lifesciences Limited. The violations relate to failure to disclose pledge and unpledged transactions, and failure to provide annual declarations regarding encumbrances as required under Regulation 31 of SAST Regulations. The adjudication proceedings were initiated following examination of the Draft Letter of Offer submitted for the acquisition.

Key Points

  • Adjudication proceedings initiated under Section 15-I of SEBI Act, 1992 and Rule 5 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995
  • Noticee: Lenus Finvest Private Limited (PAN: AACCL9703E)
  • Target Company: Eiko Lifesciences Limited
  • Alleged violations: (1) Failure to disclose pledge and unpledged transactions, (2) Failure to give annual declaration regarding encumbrances
  • Show Cause Notice issued on September 29, 2025 (Ref. No. SEBI/HO/EAD/EAD1/P/OW/2025/00025669/1)
  • Noticee’s defense: Margin pledges are risk management tools for brokers and fall outside the legislative intent of Regulation 31, which targets encumbrances created to secure debt
  • Noticee cited exemption under Regulation 31(2) in their reply dated October 09, 2025

Regulatory Changes

No new regulatory changes introduced. This order enforces existing provisions under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, specifically Regulation 31 relating to disclosure of encumbrances.

Compliance Requirements

  • Promoters acquiring shares of target companies must disclose all pledge and unpledged transactions as required under Regulation 31 of SAST Regulations
  • Annual declarations regarding encumbrances on shares must be filed as per prescribed timelines
  • All encumbrance invocations or releases must be disclosed in the specified form
  • Acquirers must ensure full compliance with disclosure requirements during takeover processes

Important Dates

  • May 05, 2025: Adjudicating Officer appointed
  • September 29, 2025: Show Cause Notice issued
  • October 09, 2025: Noticee’s reply submitted
  • January 05, 2026: Order published

Impact Assessment

This is an entity-specific enforcement action with limited broader market impact. The order addresses procedural compliance issues related to pledge disclosures during a takeover transaction. The case highlights SEBI’s continued focus on ensuring transparency in shareholding patterns and encumbrances during acquisitions. The defense raised by Lenus Finvest regarding the distinction between margin pledges (as broker risk management tools) versus debt-securing encumbrances may have interpretative implications for future disclosure requirements. Market participants involved in acquisitions should ensure strict adherence to all disclosure obligations under SAST Regulations to avoid similar enforcement actions.

Impact Justification

Entity-specific enforcement action for procedural disclosure violations during acquisition, limited broader market impact