By an order dated 31st March 2020, Securities Exchange Board of India (SEBI) imposed Rs.1 crore penalty on two promoter entities of Yes Bank Limited (YBL) namely – Morgan Credits Private Limited (MCPL) and Yes Capital (India) Private Limited (YCIPL). These two entities failed to disclose encumbrance or pledge on their shareholding in YBL. YCIPL had raised ?630 crore from Franklin Templeton Mutual Fund and MCPL had raised ?950 crore from Reliance Mutual Fund through unlisted Zero Coupon Non-Convertible Debentures. They had agreed to maintain a borrowing cap or a cover of YBL’s equity shares against the debentures during the subsistence of the debenture deeds. MCPL and YCIPL had not made any disclosures to YBL and the stock exchanges and contended that the transactions in question were not covered within the scope of a pledge. According to SEBI, the agreement to maintain a cover ratio was in effect a ‘non- disposal undertaking’, amounting to creation of an encumbrance. By not disclosing it, the promoter entities violated the provisions of Regulations 31(1) read with 31(3) and Regulation 28(3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations).
SEBI observed the following:
This update has been contributed by Harshita Jagwani (Associate).
Download Pdf
7A, 7th Floor, Tower C, Max House,
Okhla Industrial Area, Phase 3,
New Delhi – 110020
The rules of the Bar Council of India do not permit advocates to solicit work or advertise in any manner. This website has been created only for informational purposes and is not intended to constitute solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work in any manner. By clicking on 'Agree' below, you acknowledge and confirm the following:
a) there has been no solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;
b) you are desirous of obtaining further information about us on your own accord and for your use;
c) no information or material provided on this website is to be construed as a legal opinion and use of this website will not create any lawyer-client relationship;
d) while reasonable care has been taken in ensuring the accuracy of the contents of the website, Argus Partners shall not be responsible for the results of any actions taken on the basis of information provided in this website or for any error or omission in the website; and
e) in cases where the user has any legal issues, the user must seek independent legal advice.