Markets regulator Securities and Exchange Board of India (SEBI) has slapped a penalty of Rs8 lakh on Brightcom Group Ltd for failing to make timely disclosures to stock exchanges.
In an order, Barnali Mukherjee, adjudicating officer (AO) of SEBI, says, "It is observed that securities appellate tribunal (SAT) has consistently held that the obligation to make a disclosure within the stipulated time is a mandatory obligation and a penalty is imposed for non-compliance of the mandatory obligation. Hence, in view of the violation of provisions of LODR Regulations, 2015, it is a fit case for imposition of penalty under Section 15A(b)of the SEBI Act, 1992 and under Section 15HBof the SEBI Act, 1992 for the violations of provisions."
SEBI's examination of Brightcom Group revealed several violations of disclosure rules. The regulator initiated proceedings against the company and issued a show cause notice on 31 May 2024.
One significant issue was the late submission of financial statements. Brightcom group's auditor issued a modified opinion for the financial year ending 31 March 2023. However, the required statement was submitted 23 days late on 20 June 2023, violating Regulation 33(3)(d) of the LODR Regulations, which mandates submissions within 60 days after the financial year ends.
Additionally, the Company failed to submit financial results for the quarters ending September and December 2023. Despite claiming that resignations were the cause of the delay, the results were not submitted by the required date of 31 May 2024 nor by the time of the order.
Brightcom group also delayed disclosures regarding director resignations. For example, Nilendu Chakraborty resigned on 20 October 2023, but the disclosure was made only on 27 October 2023, six days late. Similar delays occurred for other resignations as well.
Further, Brightcom group disclosed the resignations of key personnel in August 2023 and March 2024 but did not provide copies of the resignation letters. The Company's claim that this omission was unintentional was rejected by SEBI.
Brightcom group's late submission of the shareholding pattern for the quarter ending 31 December 2023 was another violation. This was submitted four days late on 25 January 2024, violating Regulation 31(1) of the LODR Regulations, which requires submissions within 21 days.
Moreover, Brightcom group failed to disclose the resignation of its statutory auditor, P Murali & Co, within 24 hours. The auditor resigned on 27 July 2023, but the disclosure was made only on 12 August, resulting in a 15-day delay. Claims of ongoing communications with the auditors do not justify this delay.
Mr Mukherjee, AO of SEBI, also found that the board meeting on 21 January 2024 concluded at 23:30, and the outcome was disclosed late on 22nd January, violating the requirement to disclose within 30 minutes. An 18-minute delay was attributed to technical issues, confirming a violation of Regulation 30(1).
Furthermore, Regulation 20(2A) of the LODR Regulations requires at least three directors, including one independent director, on the stakeholders relationship committee. However, the corporate governance report for the quarter ending 31 December 2023, showed only two directors on the committee, indicating a violation. The Company cited frequent board changes as the reason, but this explanation was deemed insufficient.
Lastly, all listed entities must obtain and disclose specific information from resigning auditors. Although P Murali & Co resigned on 27 July 2023, the disclosure made on 12th August was unsigned and lacked required declarations. The company also failed to confirm the absence of other material reasons for the resignation, SEBI says.
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