Description

SEBI settles enforcement proceedings against Kerala Ayurveda Limited for failure to obtain prior shareholder approval for material related party transactions, with a settlement amount of ₹5.80 lakhs.

Summary

SEBI issued a settlement order (SO/AS/PSD/2025-26/8627) in the matter of Kerala Ayurveda Limited [PAN: AABCK4228Q] for violation of Regulation 23(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company failed to obtain prior shareholder approval for material related party transactions with Ayurvedagram Heritage Wellness Centre Private Limited. The settlement was approved on January 20, 2026, with a settlement amount of ₹5,80,000 paid on January 23, 2026.

Key Points

  • Kerala Ayurveda Limited filed a suo moto settlement application under SEBI (Settlement Proceedings) Regulations, 2018
  • Violation: Failure to obtain prior shareholder approval for material RPTs with Ayurvedagram Heritage Wellness Centre Private Limited
  • Company obtained post facto ratification from shareholders via board resolution dated June 18, 2025
  • Settlement amount: ₹5,80,000 (Rupees Five lakhs eighty thousand only)
  • Company submitted that non-compliance was not deliberate and immediate corrective steps were taken
  • Settlement follows neither-admit-nor-deny principle
  • SEBI will not initiate enforcement action for the stated violation

Regulatory Changes

No regulatory changes introduced. This order reinforces existing requirements under Regulation 23(4) of LODR Regulations regarding prior shareholder approval for material related party transactions.

Compliance Requirements

  • Listed entities must obtain prior shareholder approval for material related party transactions as per Regulation 23(4) of LODR Regulations
  • Post facto ratification may be considered in settlement proceedings but does not eliminate the violation
  • Companies should implement robust internal controls to ensure timely identification and approval of material RPTs
  • Settlement does not prejudice SEBI’s rights under Regulation 28 and 31 if representations are found untrue or undertakings are breached

Important Dates

  • June 18, 2025: Board resolution for post facto shareholder ratification
  • September 25, 2025: Internal Committee meeting with applicant
  • September 29, 2025: Revised settlement terms submitted
  • November 28, 2025: HPAC meeting recommending settlement
  • January 20, 2026: Panel of Whole Time Members accepted HPAC recommendations
  • January 23, 2026: Notice of Demand issued
  • January 23, 2026: Settlement amount remitted by applicant

Impact Assessment

Market Impact: Minimal. This is a company-specific settlement order with no broader market implications.

Compliance Impact: Moderate for Kerala Ayurveda Limited. The settlement provides closure on the enforcement proceedings while the company has already implemented corrective measures through post facto ratification.

Precedential Value: Reinforces that material RPTs require prior shareholder approval under LODR Regulations. Demonstrates SEBI’s willingness to settle non-deliberate violations through the settlement mechanism when companies take prompt corrective action.

Investor Impact: Low. The settlement amount is relatively small (₹5.80 lakhs) and the violation was procedural rather than substantive fraud or misrepresentation. Post facto ratification was obtained from shareholders.

Impact Justification

Company-specific settlement for procedural non-compliance in RPT approval. Non-deliberate violation with post-facto ratification obtained. Limited market-wide impact.