Market regulator Securities and Exchange Board of India (SEBI) imposed a total penalty of Rs73 lakh on seven entities, including the company, its managing director (MD) and non-executive director, while asking them to disgorge Rs38.65 crore, along with simple interest at the rate of 12% per annum from 27 July 2010 till the date of actual payment. SEBI also barred these seven entities from markets for one year to three years.
The individuals penalised by SEBI include: Zafar Yunus Sareshwala and Uves Yunus Sareshwala (both referred as acquirers), Parsoli Corporation, Umar Uves Sareshwala, Habib Zafar Sareshwala, Maheshkumar Amritlal Patel, and Mohammed Alibhai Kothawala.
In an order, Ananth Narayan, whole time member (WTM) of SEBI, says, "The Acquirers and Parsoli Corporation defrauded their shareholders by fraudulent transfer of shares to promoter or front entities. Considering the conduct of these noticees and to protect the interest of the investors, SEBI order dated 27 July 2010 directed the acquirers to provide an exit opportunity to the shareholders. Even after lapse of more than 10 years, the acquirers failed to make a public offer despite the SEBI directions having been upheld by the Supreme Court of India."
"....Further, the acquirers and Parsoli Corporation failed to cooperate with the independent valuer appointed by SEBI despite the issuance of advisories by SEBI. By failing to comply with the directions, the Acquirers have adversely affected the interests of the shareholders of Parsoli Corporation by denying them the right to exit at a fair price."
Parsoli Corporation, a company listed on the Bombay Stock Exchange (BSE), has been involved in a long-standing legal battle with SEBI over fraudulent activities by its promoters, Zafar and Uves Sareshwala. SEBI investigation revealed that these promoters had issued 80,800 false share certificates, forged investor signatures and carried out fraudulent share transfers.
In July 2010, SEBI ordered the promoters to make a public offer to acquire shares from public shareholders at a fair price under the Delisting of Equity Shares Regulations, 2009. Despite this order, the promoters did not comply. Their appeal against the order was dismissed by the securities appellate tribunal (SAT) in 2011 and later by the Supreme Court.
Despite SEBI's efforts, the promoters continued to disregard these rulings. When they finally submitted a draft letter of offer (DLoF) in 2019 through Nirbhay Capital Services Pvt Ltd, SEBI rejected the proposed price of Rs0.25 per share, insisting that the price be based on financial data from 2009-2010.
Further non-compliance by the acquirers, including their refusal to provide necessary documents to SEBI's independent valuer, led the market regulator to issue a final advisory in 2020. SEBI warned of further enforcement actions if the required information was not provided.
In December 2021, SEBI issued an interim order requiring the promoters to deposit funds to complete the public offer within 60 days, but the Acquirers again failed to comply, continuing their pattern of defiance for more than a decade.
In its final order, SEBI calculated the floor price for the public offer at Rs22.82 per share, based on trading data from the six months leading up to July 2010. Due to the delay, SEBI also imposed an interest of 15% on the offer price from 2010 onwards.
Key managerial personnel of Parsoli Corporation were also held accountable for withholding critical information, which led to further delays in executing the public offer. SEBI found the company's compliance officer and several directors negligent for failing to cooperate with its directives.
Ultimately, SEBI imposed fines totalling Rs73 lakh. Zafar and Uves Sareshwala were fined Rs25 lakh each. Parsoli Corporation and Maheshkumar Patel were fined Rs10 lakh each, while Umar Sareshwala, Habib afar Sareshwala and Mohammed Kothawala were fined Rs1 lakh each.
Zafar and Uves Sareshwala have also been barred from the securities market for three years. Parsoli Corporation and Maheshkumar Patel have been barred for two years, while Umar Sareshwala, Habib Sareshwala, and Mohammed Kothawala are restricted for one year.
