HTL and Affiliates Penalised for Delisting and Disclosure Violations

In a significant regulatory move, the Securities and Exchange Board of India (SEBI) has imposed penalties totaling Rs 35 lakh on OP Jindal Group’s Hexa Tradex Ltd (HTL) and its affiliates for multiple breaches of delisting norms and other disclosure obligations.

SEBI imposed fines ranging from Rs 2 lakh to Rs 5 lakh on HTL, its chairperson and Promoter entities including Siddeshwari Tradex Pvt Ltd, Innox Global Multiventures, Opelina Sustainable Services, and JSL Ltd.

Prompted by a complaint in July 2022, SEBI conducted a detailed examination of the delisting process of HTL, a company listed on both BSE and NSE. The investigation uncovered significant lapses in due diligence and adherence to regulatory requirements.

Key Violations:

  • Failure to Show Care and Diligence: HTL’s directors did not perform their duties with the required care, diligence, or professionalism. They passed an incorrect resolution and failed to provide reasoned recommendations for the delisting proposal.
  • Non-compliance with Delisting Regulations: HTL and its directors violated SEBI’s Delisting Regulations, 2021, particularly Regulation 10(3), which mandates due diligence and compliance certification by the Company Secretary.
  • Disclosure Requirements: The company violated SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, specifically Regulation 26(3), which requires annual compliance affirmation from board members and senior management. HTL’s directors did not ensure the accuracy of disclosures, especially regarding securities laws and the delisting process.
  • Failure to Disclose Material Information: Promoter entities, including Siddeshwari Tradex Pvt Ltd and JSL Ltd, failed to provide crucial information in their Detailed Public Announcement (DPA), violating Regulation 15(2) of the Delisting Regulations. This omission deprived investors of essential information needed for informed decision-making.
  • Inadequate IDC Recommendations: The Committee of Independent Directors (IDC) of HTL did not fulfill its obligation to provide reasoned recommendations on the delisting proposal as required by Regulations 28(2) and (3) of the Delisting Regulations.

Following the findings, SEBI has taken stringent measures to ensure compliance and accountability. The penalties underscore the regulator’s commitment to maintaining transparency and protecting investor interests in the securities market.