SEBI orders open offer after Shubhlaxmi promoter's 5% share increase

Who it concerns: Shubhlaxmi Jewel Art Limited (Target Company); Narendrasinh J Chauhan, Soham Narendrasinh Chauhan, Ranjitsinh Gambhirsinh Solanki, Jagrutiben N Chauhan, Jignasha Ranjitsinh Solanki, Vilasben Ashokkumar Parmar, Kajal Jitendrakumar Chauhan, and Jitendrakumar J Chauhan (Noticees/Promoter Group).

What SEBI found or ordered

• SEBI found that the Noticees violated Regulation 3(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
• The violation occurred because the promoter group's shareholding increased by 5.82% (exceeding the 5% threshold) following the conversion of warrants into equity shares on May 08, 2023, without making a required open offer.
• SEBI determined that the Noticees are liable for a monetary penalty under Section 15H of the SEBI Act.
• The statutory penalty range for this violation is not less than INR 10 lakh and may extend to INR 25 crore or three times the profits made, whichever is higher.
• The text provided is truncated before the final specific penalty amount is stated.

Also in the document

• SEBI rejected the Noticees' argument that the allotment was a rescue measure for a financially distressed company, stating that the legal requirement for an open offer applies regardless of the intent or benefit to public shareholders.
• The order notes that the share price (Rs. 28) was double the warrant issue price (Rs. 14) at the time of the response, but this did not exempt the Noticees from the regulatory violation.